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46th Congress, ) HOL^ / PRESENT ATIYES. j Mis. Doc. 

2d Session. f - ll " ~ \ No. 5. 



CAUSES OF GENERAL DEPRESSION IN LABOR AND 
BUSINESS. CHINESE IMMIGRATION. 



INVESTIGATION 



SELECT COMMITTEE 



OF THE 



l i C. 






HOUSE OF REPRESENTATIVES 



RELATIVE TO 



THE CAUSES OF THE GENERAL DEPRESSION IN LABOR AND 
BUSINESS; AND AS TO CHINESE IMMIGRATION. 



December 10, 1879.— Ordered to be printed. 



WASHINGTON: 

: , F-BTOtENT PRINTING OFFIflEo 

1879. 






Ya 



■I 









FORTY-SIXTH CONGRESS, FIRST SESSION. 

COXGRESS OF THE UNITED STATES, 

In the House of Representatives, April 11, 1879. 

The Speaker announced the appoiutmeLt of Mr. Hendrick B. Wright, of Pennsylva- 
nia; Mr. H.- L.Dickey, of Ohio; Mr. M. P. O'Connor, of South Carolina; Mr. f. H. 
Murch, of Maine; Mr. J. C. Sherwiu, of Illiuois; Mr. Calvin Cowgill, of Indiana; and 
Mr. J. J. Martin, of North Carolina, on the Select Committee to inquire into the causes 
of the present depression of labor; which committee was authorized in the Forty-fifth 
Congress, aud (not having made a report) was continued. 

The following is the resolution for the creation of the committee : 

FORTY-FIFTH CONGRESS, SECOND SESSION. 

Congress op the United States, 
In the House of Representatives, June 17, 1878. 

Mr. Thompson submitted the following; which was agreed to : 

Whereas labor and the productive interests of the country are greatly depressed 
and suffering severely from causes not yet fully understood ; and 

Whereas our real and permanent prosperity is founded and dependent upon labor as 
the source of all wealth ; that when lahor suffers from any cause which may be re- 
moved or its rigor mitigated our national harmony and prosperity are thereby im- 
periled; that it is therefore the solemn duty of Congress to inquire into and ascertain 
the causes of such prostration and to devise proper measures for their relief, that 
labor may be restored its just rights, to the end that labor and all our varied interests 
maybe encouraged, promoted, and protected by liberal, just, and equal laws: Therefore, 

Resolved, That a committee consisting of seven members of this House be appointed 
whose duty it shall be to inquire into and ascertain the causes of general business de- 
pression, especially of labor, to devise and propose measures for relief, and that to en- 
able said committee to perform its important duties hereby conferred, it has leave to 
sit during recess, to employ a clerk and such other assistance as may be needed, to ex- 
amine witnesses, and to report at next session the result of its investigations and the 
measures for relief it may recommend, by bilLor otherwise. 

Attest : 

(Signed) GEO. M. ADAMS, Clerk. 



TESTIMONY. 



TESTIMONY TAKEN IN CHICAGO. 

CONTRACTION OF THE CURRENCY— SOCIAL PROBLEMS. 

Chicago, III., July 28, 1879. 
The committee met in a parlor of tbe Tremont House; present, the 
Chairman (Mr. Wright, of Pennsylvania), and Messrs. O'Connor of South 
Carolina, Dickey of Ohio, Cowgill of Indiana, Sherwin of Illinois, and 
Martin of North Carolina. 

Statement of Mr. L.J. Gage. 

Mr. L. J. Gage, cashier of the National Bank of Chicago, came before 
the committee at its request. 

The Chairman. How long have you been engaged in the banking 
business in this city ? 

Mr. Gage. For twenty one years. 

The Chairman. Uninterruptedly t, 

Mr. Gage. Yes, sir. 

The Chairman. State as to the general amount of banking business 
in this city, the rates of discount, the banking capital, and such other 
matters as relate to that business. 

Mr. Gage. The banking capital of Chicago is now about ten millions 
of dollars. That iucludes all the banks. I have not got the figures be- 
fore me, and speak only from recollection. 

The Chairman. You mean by that the incorporated banks of the 
city? 

Mr. Gage. Yes, sir. 

The Chairman. You do not include brokers and such business 
houses ? 

Mr. Gage. No, sir. 

The Chairman. Can you give us an idea of the general amount of 
bank deposits in this city, taking in the present year with the five or 
six past years ? 

Mr. Gage. The average deposits held by all the banks of Chicago is 
not far from thirty millions of dollars. 

The CHAIR3IAN. What is the average amount of loans and discounts ? 

Mr. Gage. I think from twenty-two to twenty-four million dollars. 

The Chairman. What has been the usual rate of interest, taking in an 
average of ten years past I 

Mr. Gage. The rate of interest ten years ago was 10 per cent, on all 
loans and discounts made by the banks. Since that time the rate has 
slowly settled, until now it may be quoted as from 6 to 8 per cent., ac- 
cording to the character of the loans, their desirability, &c. 

The Chairman. Taking an average of the last ten years, has there 
been money sufficient in the banks of Chicago to accommodate the 
business community ? 

Mr. Gage. I think saj I think there never has been a deficiency of 



6 DEPRESSION IN LABOR AND BUSINESS. 

money for the last ten years to meet all the legitimate business demands. 
At present there is a large surplus of loanable funds in the banks which 
the banks will be glad to use. 

The Chairman. State in general terms whether, in your opinion, 
there is any necessity for an increase of the currency of the country ? 

Mr. Gage. I cannot conceive of there being any necessity at present 
for any increase in the circulating medium. 

The Chairman. Do you confine your remark to the present time, or 
do you take in an average often years ! Has that been the rule during 
that period ? 

Mr. Gage. I think that the necessity, if any has existed, existed 
more than ten years ago, but it does not exist now. 

The Chairman. Make your period five years ago, and what would be 
your reply % 

Mr. Gage. It would be the same. 

The Chairman. There was no necessity, then, for an increase in the 
circulating medium % 

Mr. Gage. I think there was no such necessity at any period. 

The Chairman. Have the banks of Chicago been able, during that 
period of time to discount all the good paper offered ? 

Mr. Gage. So far as my experience goes, they have been. The bank- 
ing interest has been able to take care of all applications for loans that 
possessed the elements of safety. 

The Chairman. What is your rule as to the safety of discounts ? 

Mr. Gage. There are no absolute rules governing the question of 
safety. Every application, of course, stands on its own merits. The 
thing that will induce a bank to part with its money is the unquestioned 
faith that the money will come back again according to the terms of 
the contract. 

The Chairman. There are two ways of procuring discounts, one by 
the endorsement of paper, and the other by the deposit of collaterals. 
Which is the usual mode here ? 

Mr. Gage. Both methods prevail here. Banks in this city make large 
advances on collateral securities, and to a large extent on the pledge of 
agricultural products, grain, provisions, wool, &c. 

The Chairman. Does the general depression in agriculture and other 
business affect the banking business in this city ? 

Mr. Gage. It has reduced the inquiry for loans, and has consequently 
increased the idle money in the hands of bankers, and thereby has 
operated to diminish the profits of the banks. 

The Chairman. Are we to understand that the banking business of 
this city (taking in a range of eight or ten years) has been in as good a 
condition as you could desire it to be in ? 

Mr. Gage. Not as a whole. Ten years ago the banks held claims 
against parties whose wealth was estimated by standards which recent 
history has shown to be false standards. During the last six or seven 
years, the banking interest has suffered heavily from the failure of 
parties against whom the banks held claims, and by the reduction in 
value of securities of all kinds owned by banks. But these losses and 
this depreciation have, in my opinion, reached their limit, and for the 
last year or two the banking business in this city has been in a safer 
and sounder condition as a whole than it had been at any time previ- 
ously for the last ten years. 

The Chairman. Can you give us an approximate idea as to the aver- 
age losses by the banks during that period of time % 

Mr. Gage. I cannot venture a statement as to the losses of the banks. 



DEPRESSION IN LABOR AND BUSINESS. 7 

The data exist at Washington so far as the natioual banks are con- 
cerned. 

The Chairman. You mean the annual returns of the banks ? 

Mr. Gage. Yes. These returns would show much better than any 
statement which I would dare to make now. 

The Chairman. You speak of the banks being in a more prosperous 
condition at present than they had been for the last ten years ; when did 
that increased prosperity commence? 

Mr. Gage. I think it is plainly noticeable for a period dating back 
twelve or eighteen months ago. 

The Chairman. Then commenced a state of things for the better? 

Mr. Gage. For the better in the way of safety and regularity, but 
not for the better in the way of apparent profits to the banks. Previ- 
ous to that period the discounts were larger in proportion to the bank- 
ing capital employed and to the deposits held. 

The Chairman. And the discounts were done at a higher rate of 
interest! 

Mr. Gage. Yes, sir; therefore, the business was apparently more prof- 
itable to the banks. But this apparent profit was perhaps fully offset 
on the whole by the losses incident to the period. 

The Chairman. Then at the present time the banking business of 
Chicago is in a healthy, prosperous condition? 

Mr. Gage. I think it is in a healthy condition, and reasonably pros- 
perous. 

The Chairman. Have the banks of this city the means to accommo- 
date the necessary business requirements of the city ? 

Mr. Gage. Undoubtedly they have. 

The Chairman. If the business interests of the country should con- 
tinue to grow more prosperous, and if the demand for money should be 
doubled, how would it then be as to the capacity of the banks to accom- 
modate the business of the city ? 

Mr. Gage. I think that the demand would be met by increased capi- 
tal finding its way into the banking business to a point fully adequate 
to meet any increased demand from the cause that you speak of. 

The Chairman. Y"ou would expect the bank deposits to increase to 
such an extent as to enable the banks to meet the increased require- 
ments of trade? 

Mr. Gage. I have said that additional capital would come into the 
banking business. There is no doubt that before such increased capi- 
tal came in a larger proportion of the deposits of the banks would be 
used by the banks in making discounts than is now used. 

The Chairman. You regulate your line of discount in a great mea- 
sure according to the amount of deposits which the banks hold. That 
is one of the elements which enter into the question ? 

Mr. Gage. Y>s, sir. 

The Chairman. Then you would supply the additional demand for 
discounts not from additional currency, but from deposits? 

Mr. Gage. From deposits and from increased capital finding its way 
into the banking business. 

The Chairman. You would not want additional currency issued, in 
order to meet that additional demand? 

Mr. Gage. I think not. 

The Chairman. Suppose that the business of Chicago were double, 
and the demand for money were double, what it is now, could you then 
supply that demand without additional currency ? 

Mr. Gage. I think so. 



8 DEIRESSION IN LABOR AND BUSINESS. 

The Chairman. You base that opinion on what you call additional 
capital coming into the business ? I suppose you mean by that that the 
deposits of your customers would be increased ? 

Mr. Gage. No, sir; when I speak of the capital being increased, I 
do not mean the deposits of customers, but I mean new and original 
money brought into the business by the owners of capital. I mean 
to say that there would be other bauks organized, or that the capital 
stock of existing banks would be increased whenever a demand pre- 
sents itself that would give remunerative employment to such capital. 
That certainly would be the case if the business of this city required 
double the amount of bank loans that is now required. 

The Chairman. Do you think that the city of Chicago has reached 
its ordinary state of prosperity in business affairs, embracing all trades 
and occupations? 

Mr. Gage. So far as my observation goes, it seems to me that the 
general industrial affairs of this city are in a good average condition, 
but I believe that they will improve still further, and that the evidences 
of such improvement are very apparent at the present time. 

The Chairman. In estimating what you call a good average condi- 
tion, \ou do not adopt your average standard as running through the 
past seven or eight years. You stated that you thought that about 
twelve or eighteen months ago there was a renewal of prosperity. 
What period of time do you fix for Chicago being in a good average 
condition 1 ? 

Mr. Gage. In my opinion the condition of business in Chicago will 
compare favorably now (in regard to real prosperity) with that of any 
previous period. 

The Chairman. Going back how far? 

Mr. Gage. To any time you have a mind to. 

The Chairman. Has there been no time when there has been a greater 
demand in this city for bank accommodations than there is at present 
(taking in a period of eight years)? 

Mr. Gage. I have already stated, I think, that seven or eight years 
ago there was a much larger demand for bank accommodation than 
there is at present, and that that demand has been slowly abating since. 

The Chairman. As a general thing, have the banks paid up their 
stock subscriptions in full ? 

Mr. Gage. I know of no exception to that rule. The stock subscrip- 
tions are all paid up. 

The Chairman. Do we understand you as saying that if the business 
of Chicago were doubled, or were largely increased, the business com- 
munity would have no trouble in getting accommodation from the 
banks? 

Mr. Gage. I cannot conceive that they would have any more trouble 
than there is now. 

The Chairman. That is to say, the banks now have money enough to 
meet all emergencies, and can increase their capital as business may 
require? 

Mr. Gage. The increase of business would be gradual, and the de- 
mand for money would be gradual, and gradually there would come to 
the front a supply of banking capital to meet that demand. 

The Chairman. You have turned your attention somewhat, of course, 
to the question of currency ? 

Mr. Gage. Somewhat. 

The Chairman. Do you not think that the reduction of the volume 



DEPRESSION IN LABOR AND BUSINESS. 9 

of currency by more than one half lias been a greater reduction than 
should have taken place? 

Mr. Gage. No, sir; that is not my opinion. 

The Chairman. The present amount of currency (including legal- 
tenders and bank notes) amounts, I think, to about seven hundred mil- 
lion dollars'? 

Mr. Gage. That is about the amount. 

The Chairman. Do you recollect what the amount was during the 
war? 

Mr. Gage. There have been various ways of estimating the volume 
of currency. There has been a great difference of opinion as to what 
constituted the currency. There were during the war 5 per cent, in- 
terest notes (Treasury notes). There were compound-interest notes and 
gold demand notes, and there were the regular legal-tender notes, with, 
finally, the national-bank note circulation coming in. 

The Chairman. Making an aggregate of about how much ? 

Mr. Gage. I cannot say exactly from memory; but if it should all be 
called circulation (about which there is much dispute), I should say that 
the amount was some fifteen hundred million dollars. 

The Chairman. In your judgment, was the contraction of that vol- 
ume of currency, down to its present amount, calculated in any way to 
depress or to interfere with the industries of the country ? 

Mr. Gage. I have no doubt that the withdrawal or funding of that 
volume of government indebtedness just spoken of has operated some- 
what, during the last eight or ten years, to depress prices. As to the 
extent to which it has operated, there is probably no method of deter- 
mining absolutely, but in my opinion it has not been a very essential 
factor. 

The Chairman. What, in your judgment, have been the essential 
factors in producing the general prostration of trade and the reduction 
of the wages of labor throughout the country ? 

Mr. Gage. I think that an answer to that question involves a very 
wide scope, and can only be given intelligently by a much wider con- 
sideration than I am able to indulge in at the present time. It would 
involve the necessity essentially of considering the causes that led to 
the rise in prices of labor and of ail other commodities, and the gradual ex- 
tension of credits, which was an incident in the rise of prices. My 
opinion is that the depression was mainly a reaction towards a normal 
standard and towards normal relations that had been unnaturally dis- 
turbed by the causes which led to the increase in prices of all commod- 
ities and lands and labor, and to the immense transfer of capital into 
fixed forms, such as ships, railroads, mines, manufactories, &c, out of 
due proportion to the then requirements. 

The Chairman. Then, according to your judgment, the movement 
was simply going back to what vou call the normal condition of af- 
fairs ! 

Mr. Gage. That expresses it 

The Chairman. What is the average shrinkage in the value of real 
estate in this city, comparing its present value with its value before the 
panic in 1873? 

Mr. Gage. I hardly feel authorized to indulge in estimates of that 
kind, as my attention has not been sufficiently attracted to that sub- 
ject. 

The Chairman. Is it not a conceded fact that there has been a very 
large shrinkage in the value of real estate in Chicago ? 

Mr. Gage. Yes, sir ; that is unquestionably true. 



10 DEPEESSION IN LABOR AND BUSINESS. 

The Chairman. To what cause do you attribute such shriukage ? 

Mr. Gage. The immediate cause of it is that there are more sellers than 
buyers. But the reason why there are more sellers than buyers will be 
found, I think, involved in my answer to a previous question. There 
had been an extraordinary and wild inflation of prices, and the present 
low prices are a reaction. 

Mr. Sherwin. How do the prices of real estate in Chicago compare 
now with the prices previous to the period of inflation ? 

Mr. Gage, i am not sufficiently acquainted with the market to feel 
justified iii answering the question or in making estimates on that 
point. 

Mr. Sherwin. What would be the purchasing power of the present 
prices of real estate in this city compared with the purchasing power 
of the prices at which such real estate could have been sold in 1873 ? 

Mr. Gage. An answer to that question would infer information on my 
part which I do not claim to be possessed of, but ray opinion is that, 
taking the average of real estate in this city (business property and all 
that is in actual use for the conduct of business operations and under 
rental), the purchasing power of the present selling price of real estate 
as against commodities generally would not be essentially different from 
the purchasing power of the selling price of real estate towards com- 
modities generally in the former period ; but in that statement I do not 
claim to be exact. 

Mr. Sherwin. The inflation of property here was less in respect 
to inside city property than in respect to outside property. 

Mr. Gage. Yes, sir ; consequently the shrinkage on outlying lands 
and lots has been altogether out of proportion to the shrinkage sus- 
tained by improved property under rental. 

Mr. O'Connor. You stated that during the war there were about fif- 
teen hundred millions of circulating medium of all kinds afloat in the 
country. Can you tell when the government commenced to withdraw 
the circulation ? 

Mr. Gage. About 1866, I think, when the process of the refunding 
and retirement of those interest bearing uotes began. 

Mr. O'Connor. Contemporaneously with the adoption of the policy 
by the Secretary of the Treasury of the withdrawal of the circulation, 
did not the shrinkage in values begiu, both as to labor and as to the 
prices of commodities ? 

Mr. Gage. I am not of that opinion. I think there was uo percepti- 
ble break in prices of commodities or in prices of labor until the year 
1873. I think that the thing kept on booming here until 1873. 

Mr. O'Connor. Was not the ratio in the increase of the population of 
Chicago much larger ten years ago than it has been since ? 

Mr. Gage. I think that that is true. 

Mr. O'Connor. Was not the volume of trade and business transac- 
tions in Chicago ten years ago much larger than it has been since? 

Mr. Gage. Estimating it in prices, yes ; estimating it in bulk of com- 
modities handled, not by any means. There has been a large increase 
in the quantity of trade. 

Mr. O'Connor. Does not the increase of population necessarily in- 
crease the volume of trade and business of any city % 

Mr. Gage. No, sir; except to a very limited extent. Of course the 
wants of those families coming in would increase the retail trade of a 
city, but would not necessarily increase its general trade. 

Mr. O'Connor. Do you or not hold it as a law of political economy 
that all prices bear a necessary relation to the amount of money or cir- 



DEPRESSION IN LABOR AND BUSINESS. 1 I 

culating medium tb at exists? In other words, if fifty millions of banking 
capital was in use in Chicago, and if that capital was reduced one-fourth 
or one-third, would that reduction not effect in a similar degree a re- 
duction in the prices of commodities as well as of property ? 

Mr. Gage. In answer to the first part of your question, it is, I think, 
admitted that, as the supply of circulating medium increases, prices tend 
upward. In answer to the last part of your question, I do not tniuk that 
the consequences would follow which you suggest. 

Mr. O'Connor. Supposing that the circulating medium of this coun- 
try, which is now set down as seven hundred million dollars (greenbacks, 
natioual-bank notes, &c), were reduced one-third, would not that re- 
duction affect prices to the same extent, generally speaking 1 

Mr. Gage. I do not think so. If the contraction in paper money which 
you speak of took place, and if the want of a circulating medium were 
felt, a metallic currency would come in to supply the need. To get this 
supply of metallic currency the prices of exported articles would have 
to decline somewhat, but nothing in comparison to the percentage which 
you speak of. 

Mr. O'Connor. When did the depression in the industrial and busi- 
ness interests of Chicago begin ? Was it not felt before the panic of 
1873! 

Mr. Gage. No, sir ; I think not. Everything was very prosperous 
here uutil 1873. There was, of course, more or less individual derange 
ment, and there was suffering in consequence of the fire of 1871, but that 
was purely local. 

Mr. O'Connor. And you say that a revival in business has been per- 
ceptible since when ? 

Mr. Gage. For the last twelve or eighteen months. 

Mr. Martin. Do you think that that revival is going to be perma- 
nent ? 

Mr. Gage. I see no reason why it should not be permanent. 

Mr. Dickey. You stated in answer to the chairman that business 
generally was equally prosperous now as at any former period. Do you 
mean the business of Chicago or the business of the country at large ? 

Mr. Gage. I was speaking particularly of the business affairs of Chi- 
cago. 

Mr. Dickey. I ask you the same question touching the business of 
the whole country at large ? 

Mr. Gage. I think it is plain that there has been a great improvement 
in the industrial affairs of the country generally within a period of twelve 
or eighteen months, but whether that improvement has generally reached 
as good an average as I have estimated to exist here, I am unable to 
say. 

Mr. Dickey. Do you consider that there is now any depression in 
business or labor throughout the country % 

Mr. Gage. So far as my observation goes there is a general improve- 
ment in all branches of industry. There is a growing disposition on the 
part of capitalists to embark in industrial enterprises. This has operated 
to give increased employment to the idle labor of the country, and is, I 
think, in a fair way (if -undisturbed in its course) to bring into activity all 
the energies of the country, whether of labor or of capital. 

Mr. Dickey. Did the legislation of Congress affect this matter in any 
way, or was it the cause of bringing about the depression which existed 
before the present revival in business ? 

Mr. Gage. I do not think that legislation was at all the occasion of 
the depression. I think the depression was an inevitable result of fore- 



12 DEPRESSION IX LABOR AND BUSINESS. 

going causes, and that it could not have been escaped by all the wisdom 
of all the legislators. 

Mr. Dickey. Can there be in your judgment any legislation on the 
financial affairs of the country to benefit its condition 1 If so, state 
what that legislation should be. 

Mr. Gage. I do not propose to be wise enough to find a cure by legis- 
lation for all the ills that society suffers. In the industrial affairs of the 
country it seems to me that the duty of legislative bodies is simply to 
define the obligations of the citizens to each other, and to secure the 
enforcement of individual rights. In the matter of finances, I believe 
that the government should confiue its operations to the maintenance of 
its own credit and the faithful discharge of all its financial obligations, 
interfering as little as possible in the general industrial system. 

Mr. Dickey. I agree with you as to the duty of the legislators in re- 
gard to the rights of property and of the rights of individuals, but the 
Government of the United States does now manage and control the 
finances of the country. And may not the business and labor depression 
which existed in this country some time ago, as .you admit, have been 
caused chiefly by the action of Congress in relation to finances ? 

Mr. Gage. I think that the depression was caused by, or was the 
natural effect of, the expansion. The expansion was inaugurated through 
the financial legislation of Congress. Possibly it was a necessity of the 
times. At any rate, it has occurred and the evil has been done. I do 
not think that the refunding of the demand obligations of the govern- 
ment had any effect, except perhaps to hasten an event which was in- 
evitable, aud I believe that the highest good of the country was secured 
by any act or any cause that would bring that period soonest about. 
Therefore, I regard the action of Congress in retiring some of its out- 
standing obligations as a beneficent one. It was in the line of the gov- 
ernment's direct obligation to do so. If it hastened or made more in- 
tense the period of depression, it saved us from many evils which we 
should have suffered if that period had been longer deferred. 

Mr. Dickey. Then I understand you to mean that the present exist- 
ing laws in regard to the finances of the country should not be disturbed, 
but that they should remain as they are? 

Mr. Gage. I do think that they ought to be changed. 

Mr. Dickey. What change would you suggest ? 

Mr. Gage. It seems idle (and of course is so) for any individual to 
offer his opinions as to just what he would have. But you ask the ques 
tion, and as I have my own opinion about it, I will make free to give my 
views, knowing that many will receive them with incredulity, many with 
utter contempt. If I had my say, I would repeal the legal-tender quality 
of the United States notes. I would pay them to the bearer on demand 
when he called for them; and I would not issue them any more. I 
would make gold coin and silver dollars exchangeable with each other 
at the sub-treasuries of the United States. I would suppress the issue 
of small bank notes under $5, and I would retire those issued by the 
government now outstanding as rapidly as possible. 

The Chairman. Do you mean that you would not issue that identical 
bill agaiu, or that you would not issue another inlieu of it? 

Mr. Gage. I would be willing to reissue new notes wheu they were 
called for in exchange for gold, or in payment of government indebted- 
ness. 

Mr. Dickey. Then you are a bi-metallist, I suppose ? 

Mr. Gage. Yes. 



DEPRESSION IN LABOR AND BUSINESS. 13 

Mr. Dickey. Would it not be good legislation to enact that the coin- 
age of silver dollars should be free and unlimited? 

Mr. Gage. With a law in force as I have suggested, making gold and 
silver interchangeable with each other, it might be perfectly safe for tin- 
government to coin silver dollars to the extent that the government will 
be called upon to do so. But free coinage of silver by the holders of 
bullion would be impossible except the value of silver should become 
equal in ratio to the value of gold. 

Mr. Dickey. Under the state of affairs which you suggest, we would 
have no paper money at all. Is that your position ? 

Mr. Gage. No. We would have the demand notes issued by the gov- 
ernment and which were not legal-tenders floating in the hands of the 
people to the extent that such notes might be desired iu preference to 
coin, because the people could get them from the government on the de- 
posit of coin or in payment of claims against the government, and these 
notes would stay in circulation until the holder wished to realize again 
the metallic money. We would also have, unless the national banking 
law were repealed (which I think would be a great mistake) the national 
bank note circulation. The balance would be a metallic money. Of ne 
cessity there would be in the hands of the people and in convenient 
places of rest all through the United States a large total of coin to sup- 
ply the needs for the minimum transactions of trade. 

Mr. Dickey. What ought to be the proportion of the paper demand 
notes to the amount of coin in the Treasury — dollar for dollar '? 

Mr. Gage. I think there need be no necessity for the Treasury carry- 
ing dollar for dollar, but I do think that the proportion of coin to paper 
should be large — at least 50 per cent. 

Mr. Dickey. Do you know what proportion of coin is in the Treasury 
now to the amount of legal tender notes outstanding, under the theory 
that resumption has taken place ? 

Mr. Gage. I suppose that there is from 38 to 40 per cent, of coin in 
the Treasury. 

Mr. Martin. Is there really any depression of labor in the city of 
Chicago ? 

• Mr. Gage. I have no doubt that there are a large number of unem- 
ployed men in this city. There undoubtedly always are large numbers 
of unemployed persons in all large cities. Unless there was a surplus 
of labor, the price of labor would be constantly enhanced by the de- 
mand for it. The surplus keeps the price steady. I am not able to 
answer the question more specifically. I have talked with employers of 
labor, chiefly manufacturers in various branches, and they have informed 
me in many cases that they find difficulty in filling their shops now 
with mechanics. From that I judge that there is a steady increase in 
the demand for skilled labor, and I think in the demand for common 
labor also, and I judge that the surplus of unemployed labor is not 
very much out of proportion at the present time to that iu former 
periods which we have called periods of general prosperity. 

Mr. Martin. Then you think that a surplus of unemployed labor is 
no evideuce of depression ? 

Mr. Gage. An unusual proportion of unemployed labor would be 
evidence of depression. 

Mr. Martin. Do you think that there is an unusual surplus of unem- 
ployed labor at the present time ? 

Mr. GAGEi I have already expressed my conviction that the surplus 
of unemployed labor was not at present much, if auy, out of proportion 
unfavorably to that in former periods which we have called good times. 



14 DEPRESSION IN LABOR AND BUSINESS. 

Bat on this point my information is not good enough to speak with 
entire confidence. 

Mr. Sherwin. Have you examined the clearing-house reports for 
the last six months to see what they show in regard to the volume of 
business ? 

Mr. Gage. The clearing-house reports throughout the country show 
a marked increase in the volume of business for the six months now 
closing over the corresponding period of the previous years. 

Statement of Mr. George Schneider. 

Mr. Schneider appeared before the committee, at its request, and 
stated, in response to preliminary questions, that he has resided in Chi- 
cago for the last 28 years, and is president of the National Bank of Illi- 
nois. 

The Chairman. Have you been engaged in the banking business 
during your whole residence in this city? 

Mr. Schneider. Not entirely, but that has been my chief business. 

The Chairman. Is there any necessity for having any more currency 
for the discharge of the ordinary business in this city 1 

Mr. Schneider. I should not think so. 

The Chairman. Give us your reasous for that opinion. 

Mr. Schneider. All reasonable demands for discounts, as I under- 
stand, coming to the banks from manufacturers and merchants, are com- 
plied with. 

The Chairman. Have the banks of this city funds enough to meet 
the necessary demands for the transaction of the business of the city? 

Mr. Schneider. I believe so. 

The Chairman. What is your usual rate of interest here ? 

Mr. Schneider. At present from six to eight per cent. 

The Chairman. What has it been on an average for the last eight or 
nine years'? 

Mr. Schneider. I think it has been running about 9 per cent, some- 
times 10 per cent. 

The Chairman. What is the rate of interest here as established by 
the law of the State I 

Mr. Schneider. Eight per cent, at present. 

The Chairman. Is that the rule generally throughout the State ? 

Mr. Schneider. Yes; it is the law as passed by the last legislature. 
Before that the rate was 10 per cent. 

The Chairman. Do you regard the business of this city in all branches 
of trade, commerce, industry, and labor as being in as flourishing a con- 
dition now as it has been at any time within ten years past ? 

Mr. Schneider. I should think it is better than it has been since 
1873. Before 1873 the volume of business was larger, I think. But it 
is better at present than it has been for the last five years. 

The Chairman. During the last five years has not business in this 
city been generally depressed 1 ? 

Mr. Schneider. To some extent. The same causes that exist in older 
and larger commercial centres exist to some extent here, but perhaps 
to a less extent. Of course, we are so near to the productions of the 
country that the depression is less here than it is at points farther east. 

The Chairman. Has there been no depression in the labor of this 
city during the last seven or eight years? 

Mr. Schneider. There has been to some extent. As particular 



DEPRESSION IN LABOR AND BUSINESS. 15 

branches of industry have been depressed, of course labor was depressed 
with them. 

The Chairman. What branches of industry have been subjected to 
this general depression 1 

Mr. Schneider. The iron business, for instance. 

The Chairman. Has any other business been ! 

Mr. Schneider. Only to a moderate extent. We are commencing 
to be a manufacturing town, and I think that other industries are de- 
pressed less now than at almost any other period I know of. 

The Chairman. Then you think that you have been better off in this 
city than the people throughout the country generally have been? 

Mr. Schneider. I should think so. 

The Chairman. I am informed that there is a very great depreciation 
in the value of real estate in this city. State how that fact is. 

Mr. Schneider. I think it is no more depressed than real estate is 
at auy other point in the country, perhaps less so. 

The Chairman. What percentage would you fix upon as the shrink- 
age in value in real estate since 1873 f 

Mr. Schneider. I have never had auy transactions in real estate, 
and am not an expert in the business, so would not like to give you 
figures. 

The Chairman. But there has been and is a general shrinkage in 
value! 

Mr. Schneider. Yes, sir. 

The Chairman. Is it your opinion at this time that the banks of this 
city can furnish the necessary discounts for the transaction of the busi- 
ness affairs of this city ? 

Mr. Schneider. Yes; I believe so. 

The Chairman. Suppose that the demand for discounts should be 
doubled, would the banks then have, with their present capital, suffi- 
cient money to meet the demaud? 

Mr. Schneider. The capital would naturally increase. As soon as 
capital can find employment, of course it seeks employment. Then the 
increase of business would bring more deposits into the banks. The 
banking business is, first capital ; then that capital attracts deposits; 
and that is the basis of the banking business as carried on in America. 

The Chairman. Your line of discounts is based generally on the 
amount of deposits held by the bauks? 

Mr. Schneider. Yes. 

The Chairman. And in your judgment there is no occasiou for an in- 
crease of currency to meet the increasing demand of business in this 
city I 

Mr. Schneider. Not in my judgment. 

The Chairman. Do you regard the reduction of the currency of the 
country from seventeen hundred millions to seven hundred millions as 
good policy on the part of this government? 

Mr. Schneider. I should think it is beneficial to the legitimate busi- 
ness of the country. 

The Chairman. Do you not think that that reduction has had some- 
thing to do with the general depression? 

Mr. Schneider. It may have depressed what you may call specula- 
tion or illegitimate business. It may have kept down busiuess ventures 
which had not a good foundation, but, in my opinion, the couutry at 
larce should require a solid foundation for all business enterprises. The 
real welfare of the people demands a curtailing of wild speculation, and 



16 DEPRESSION IN LABOR AND BUSINESS. 

it should be the interest of government, so far as it can, to have business 
channels protected and not to foster speculation. 

The Chairman. Are you sufficiently informed to give us a statement 
as to the condition of laboring men in this city, and as to the prices of 
wages? 

Mr. Schneider. I am not personally familiar with the details of that 
question. 

The Chairman. Are there an unusual number of unemployed men in 
this city ? 

Mr. Schneider. I do not think so. 

The Chairman. Do you think there is business enough to furnish 
employment for the laboring men in this city f 

Mr. Schneider. Yes, to a moderate and reasonable extent. 

The Chairman. As much now as at any time within a period of seven 
or eight years f 

Mr. Schneider. The condition of the laborer is better now than it 
was five or seven years ago. 

The Chairman. When do you date the period of the commencement 
of renewed prosperity here ? 

Mr. Schneider. About a year or a year and a half ago. 

The Chairman. Has the increase continued gradually since ? 

Mr. Schneider. Yes, sir. 

The Chairman. Is it still going on ? 

Mr. Schneider. Yes, sir. 

Mr. O'Connor. You do not regard the business and industrial condi- 
tion of Chicago as any test of the busiuess and industrial condition of 
other parts of the couutry ? 

Mr. Schneider. No, sir. It may be to some extent, but not entirely. 

Mr. O'Connor. Your means of prosperity here are much larger than 
they are in other parts of the Union, are they not ? 

Mr. Schneider. I am too modest to say so, but I believe so, to some 
extent. 

Mr. O'Connor. This being a central depot for the distribution of all 
products of the great Northwest, it is necessarily a more prosperous 
and thriving place than any other part of the country '? 

Mr. Schneider. Yes, sir, to some extent it is. 

Mr. O'Connor. And the amount of depression that may exist here is 
no guide as to the amount of depression that may exist in other parts 
of the Union ? 

Mr. Schneider. It may be to some extent. 

Mr. O'Connor. Has there been as much improvement and progress 
made in the city of Chicago within the last ten years as there had been 
made in prior decennial periods ? 

Mr. Schneider. I should not think so. 

Mr. O'Connor. What decade in the history of Chicago (confining your- 
self, of course, to your own personal experience as a resident here) would 
you take to be the period of the largest prosperity and greatest growth 
of this city? 

Mr. Schneider. The decade from 18G0 to 1870. In 1871 we had the 
fire, and that checked our prosperity. 

Mr. O'Connor. Then there has been a decline since 1871 1 

Mr. Schneider. There was prosperity right after the fire, in conse- 
quence of the large sums of money spent in rebuilding the city. 

Mr. O'Connor. In what period was the increase of population in Chi- 
cago the largest? 

Mr. Schneider. I think the same period. Then right after the fire 



DEPRESSION IN LABOR AND BUSINESS. 17 

there was a large increase of mechanics, attracted by the activity of 
work. 

Mr. Martin. Did these mechanics remain here as permanent residents 
after that? 

Mr. Schneider. Most of them did. 

Mr. O'Connor. Was the increase of population between 18G2 and 1371 
greater than between 1872 and the present time? 

,Mr. Schneider. 1 should think so. Of course, there has been a con- 
stant increase since then, but there was more rapid iucrease in that 
period. 

Mr. O'Connor. Did you ever hear any complaints from the laboring- 
classes between 1862 and 1872 as to the want of labor ? 

Mr. Schneider. Not much. Of course, there are always complaints. 
People are never entirely satisfied. 

Mr. O'Connor. Have you heard of such complaints between 1872 and 
the present time ? 

Mr. Schneider. Yes. 

Mr. O'Connor. Do you or not believe that there is good cause for such 
complaint on the part of the laboring classes? 

Mr. Schneider. I have always found that those who are willing to 
work can get work. The laboring classes, as a rule, own property here. 
The city is a new one, and when the laboring classes came here lots were 
cheap, and they bought property and built frame houses on it. The 
workingmen of Chicago own more property to-day than the workingmen 
of almost any other city in the Union. 

Mr. Martin. Is there a complaint now among the workingmen of 
want of labor ? 

Mr. Schneider. I should judge, according to the newspapers, that 
there is. 

Mr. O'Connor. Has there not been a long line of bankruptcies that 
have taken place in Chicago among the dealers in real estate and among 
the commercial classes ? 

Mr. Schneider. Yes, sir. 

Mr. O'Connor. I suppose you have seen a copy of Dun's circular, 
showing the statistics of bankruptcy every year? 

Mr. Schneider. Yes. 

Mr, O'Connor. Have not the bankruptcies that have taken place in 
Chicago been steadily increasing from 1870 to 1879 ? Does not each suc- 
ceeding year show an increase in the number of failures in this city? 

Mr. Schneider. I am not familiar with statistics on that subject. 
But the national bankrupt act was on the eve of being abolished, and 
that of course caused many persons to take advantage of the act before 
it expired. I should say that over half of the bankruptcy cases that 
have taken place within the last couple of years have not been what 
could be styled commercial failures or failures in business. 

Mr. O'Connor. The repeal of the bankrupt act took effect, I believe, 
on the 1st of September, 1878 ? 

Mr. Schneider. I believe so. 

Mr. O'Connor. Do not the statistics of failures since then show a 
larger amount of failures than occurred during the preceding year \ 

Mr. Schneider. I do not think so. 

Mr. O'Connor. About what period in the history of Chicago did the 
working classes secure the largest number of homesteads for them- 
selves ? 

Mr. Schneider. I should think in the beginning, when the immigra- 
tion into Chicago commenced. I came here in 1851. A large immigra- 
H. Mis. 5 2 



18 DEPRESSION IN LABOR AND BUSINESS. 

tion commenced in 1854. Laborers then had good prices, and they in- 
vested their savings in lots. At least that was the tendency at that 
time. 

Mr. O'Connor. The laborers were gradually improving their condition 
during the period of the largest prosperity in the city of Chicago and 
during the period when there was a large influx of immigration? 

Mr. Schneider. Yes, sir. The majority of present owners of facto- 
ries in this city have been working men, to my knowledge. Take, fo,r 
instance, the manufacture of furniture, which is a very large branch of 
industry here, and one half or two thirds of the manufacturers — the 
most prosperous of them — have been, to my knowledge, workingmen 
themselves. 

Mr. O'Connor. Has not nearly every citizen of Chicago been the 
architect of his own fortune ? 

Mr. Schneider. Nearly so. All came here poor. The rich man of 
olden times has become poor and the poor man has become rich. That 
is so especially in manufacturing business ; not so much so in mercantile 
business. 

Mr. O'Connor. When was the largest increase of the manufacturing 
business of Chicago? 

Mr. Schneider. In the period from 1862 to 1870. 

Mr. O'Connor. What was the period in which the largest amount of 
mercantile business was done here f 

Mr. Schneider. I should think in the same period, and again from 
the fire up to 1873. 

Mr. Sherwin. I find in a newspaper reports (which I suppose to be 
correct) of the clearing-houses of twenty-two cities, and they show an 
increase of clearances for the six months of this year over the six 
months of last year in every instance except seven, and they show a 
total volume of increase of 20 per cent. Is that an indication of pros- 
perity or otherwise? 

Mr. Schneider. It is an indication of enlarged business. It is so ac- 
cepted the world over. 

Mr. Sherwin. I find also from the same source that the failures for 
the first six mouths of 1879 were very materially less than they were for 
the same period in 1878 — less in number, and especially less in the 
amount of the failures. What w r ould that indicate in the way of busi- 
ness ? 

Mr. Schneider. It would indicate that business has gone into better 
hands — into solvent hands. 

Mr. Sherwin. Is it your opinion that business now is on a solvent 
basis? 

Mr. Schneider. Yes. I think that business at present is approach- 
ing a better state than it has been in at any other time since my knowl- 
edge of this country. I came here in 1849. 

Mr. Sherwin. You were here during the years 1857-'58 ? 

Mr. Schneider. Yes. 

Mr. Sherwin. There was a panic here then ? 

Mr. Schneider. Yes. 

Mr. Sherwin. How did the condition of the laboring classes at that 
time correspond with their condition since the last panic of 1873 ? 

Mr. Schneider. I think that their present condition is better. The 
condition of all laboring and other people has been benefited the world 
over by the invention of machinery, by the completion of the Pacific 
Railroad, by the telegraph cable, by the Suez Canal, &c. Of course 
the commercial world is changed, but the condition of men as a general 



DEPRESSION IN LABOR AND BUSINESS. 19 

thing has been benefited. They live in more comfortable style now 
than they did formerly. 

Mr. Sherwin. What was the cause of the crisis in 1857 ? 

Mr. Schneider. It was the same as the cause of all crises the world 
over. 

Mr. Sherwin. The same as the cause of the last crisis ? 

Mr. Schneider. Yes ; the expansion of credits. 

Mr. Sherwin. I find in a report of the Treasury Department of 
July 1st a statement showing that in 1873 the amount of legal-tenders 
outstanding was $356,000,000, and in 1879 $340,000,000; being a con- 
traction of $L0,000,000 since 1873. I find that the amount of national 
bank circulation in 1873 was $347,000,000, and that it is now $329,000,000, 
being a contraction of $18,000,000; making a total contraction of 
$28,000,000 in six years. Do you think that that contraction had any 
perceptible effect on the depression of labor and business ? 

Mr. Schneider. My belief is that it had not the effect which is gen- 
erally ascribed to it. 

Mr. Sherwin. I find by this report that in 1874 the national-bank 
circulation was in excess of the circulation in 1873 by about four mil- 
lions and that the legal-tender circulation was in excess about twenty- 
six millions, so that it would appear from that that the circulation of 
the country was larger in 1874 than it was in 1873? 

Mr. Schneider. Yes. 

Mr. Sherwin. So that, in your opinion, it could not have been the 
contraction of the currency that caused the panic ? 

Mr. Schneider. That is my belief. 

Mr. Sherwin. Were you a banker in 1863 ? 

Mr. Schneider. Yes. 

Mr. Sherwin. What is your experience as to the circulation of the 
7-30 bonds — as to how much they circulated ? 

Mr. Schneider. They did not circulate. They were held as invest- 
ments. 

Mr. Sherwin. Why were they held as investments ? 

Mr. Schneider. Because they were bearing interest. 

Mr. Sherwin. It requires the counting in of these 7-30 notes to bring 
up the total circulation at that period to the figure of seventeen hun- 
dred million dollars 1 

Mr. Schneider. I believe so. 

Mr. Sherwin. In 1863 was there much coin in circulation f 

Mr. Schneider. No, sir. 

Mr. Sherwin. How is it now % 

Mr. Schneider. There is very little coin in circulation. 

Mr. Sherwin. Do you know any way of ascertaining exactly the 
amount of money that Chicago needs to transact its business? Is there 
any rule on the subject ! 

Mr. Schneider. No ; the business of Chicago is changing all the 
time. For instance, the cattle trade is increasing and other branches 
of business are increasing. Business is changing all the time. 

Mr. Sherwin. Is there any rule or method in any nation by which 
the amount of currency needed for the transaction of business can be 
accurately ascertained ? 

Mr. Schneider. I should not think so. The amount of currency 
needed is of course a question of the amount of trade, and will adjust 
itself. The currency will come when the trade requires it. 

Mr. Sherwin. Then you do not think that it would be for the interest 



20 DEPRESSION IN LABOR AND BUSINESS 

of the country for Congress to increase arbitrarily the amount of circu- 
lating medium ? 

Mr. Schneider. I do not think so. I should think that it would be 
better for the country to have as little financial legislation by Congress 
as possible. 

Mr. Sherwin. Supposing that the people of the State of Georgia or 
the people of the State of Illinois had a deficiency of circulating medium r 
do you know any way by which Congress could ascertain the amount 
needed to provide for it ? 

Mr. Schneider. I would not know how to ascertain it except by the 
local boards of trade. 

Mr. Sherwin. Can you suggest any legislation by which Congress 
can ascertaiu how much circulating medium a State needs and by 
which Congress can furnish the requisite amount ? 

Mr. Schneider. I cauuot. 

Mr. Sherwin. How does the amount of products distributed from this 
city compare this year with previous years ? 

Mr. Schneider. There is a steady increase. 

Mr. Sherwin. It was larger last -year than the year before ? 

Mr. Schneider. I should think so. 

Mr. Sherwin. How would it be in the stock and pork trade ? 

Mr. Schneider. There has been a steady increase. The reports of the 
board of trade here show a steady increase in the stock and cattle trade. 
Cattle-raising in Europe is decreasing in consequence of the dividing 
up of the large estates there. Cattle can only be raised on large estates, 
such as there w T ere in England and Germany in former years. But the 
tendency at the present day in England and Germany is to cut up and 
parcel out the large estates, and that policy naturally decreases the pro- 
duction of cattle, and of course causes a greater demand for American 
cattle, and the demand causes an increase of supply. 

Mr. Sherwin. How is it as to the volume of business and as to the 
amount of goods handled this year as compared with previous years % 

Mr. Schneider. I have no figures, but I thiuk that the volume this 
year is equal to that of any previous years, if not larger. 

Mr. Martin. What were the causes of those failures which you say 
were not business failures'? 

Mr. Schneider. Speculation. 

Mr. Martin. You say that in your opinion Congress should legislate 
as little as possible on the subject of the currency. Why do you think 
so? 

Mr. Schneider. When there is any great necessity for legislation, 
public opinion will express itself. 

Mr. Martin. Is not public opinion expressed in Congress. Does not 
Congress reflect the sentiment of the people? 

Mr. Schneider. With due respect to the present company, I would 
say not. 

Mr. Martin. You would say that Congress should not legislate at all 
on the subject of the currency? 

Mr. Schneider. As little as possible. 

Mr. Martin. You speak about the increase in the products of farms. 
How about the price of those products? Has that iucreased, too? 

Mr. Schneider. I should think so, to some extent. 

Mr. Sherwin. Should the rate of the circulating medium increase in 
the same proportion as the increase in the products of the country ? 
Supposing that there were $500,000,000 worth of crops to be moved this 



DEPRESSION IN LABOR AND BUSINESS. 21 

year — one-fifth more than were moved last year — would it require one-fifth 
more currency to transact that business? 

Mr. Schneider. That depends, of course, upon how much currency 
is locked up. That is a fact which will make itself known in the rate of 
interest. The rate of interest of money in commercial centers is the 
true indicator. 

Vieics of Mr. George Marshall Sloan. 

Mr. GeorgtE Marshall Sloan appeared before the committee at its in- 
vitation. He stated in reply to preliminary inquiries that he was a res- 
ident of Chicago ; that he came here in the fall of 18G5 ; that he had 
practiced law and loaned money until the time of the great fire; that 
he had been abroad a portion of the time since 1871. He uomiually 
practiced law, but his library had been burned, and he did not push the 
business with much energy. Five years ago he had gone to a small 
farm. 

The Chairman. Are you engaged in farming now ? 

Mr. Sloan. Yes. 

The Chairman. Give us in a general way a statement as to the con- 
dition of the farming interests in this vicinity at the present time, com- 
pared with the state of things before the recent difficulties began in the 
way of depression of labor and business. 

Mr. Sloan. The farmers are in about the condition in which they were 
when I went into the business five years ago. As a rule, there has been 
no increase of wealth among them. Those whom the panic found in 
debt have suffered by the panic ; many of them have lost their farms and 
have gone West ; others are still struggling with mortgages that were 
placed on their farms in better times. Within the last five years I have 
seen uo change to their advantage, except in some few cases. 

The Chairman. As a general rule, are the men who are engaged in 
agriculture throughout this part of the country in debt? 

Mr. Sloan. The acquaintance which 1 have with them is compara- 
tively limited, but of the number that I know fully one-fourth of them 
have their farms mortgaged. In some cases the mortgages are to the 
present full value of their property. 

The Chairman. Has the depression in the farming industry been 
very considerable? 

Mr. Sloan. It certainly has been since the flush times of the war. 

The Chairman. Do you see any marked improvement in the condi- 
tion of the farmers ? 

Mr. Sloan. There are no signs of improvement in the condition of 
the small farmers. Farms that are run by machinery and with the 
labor hired during the seasons when labor is indispensable yield profits, 
particularly wheu they are run on special crops — wheat, &c. 

The Chairman. How is it with reference to the prices of farm pro- 
ducts — are they on the increase or on the stand-still, or are they retro- 
grading ? 

Mr. Sloan. They have decreased within the last five years. The 
small products that a small farmer sells — the articles on which he re- 
lies for his family supplies, such as eggs, butter, chickens, and things 
of that sort — have decreased considerably in price during the last five 
years, from year to year. 

The Chairman. What is the wages of farm hands now, by the day or 
by the month? 

Mr. Sloan. From 75 cents to $1 a day is the price of wages now, or 
was during the spring. 



22 DEPRESSION IN LABOR AND BUSINESS. 

The Chairman. The laborer being found % 

Mr. Sloan. Yes; the laborer being found. 

The Chairman. What has been the wages per month ? 

Mr. Sloan. From $20 to $22 a month regularly. 

The Chairman. During what year have the wages been at that 
price ? 

Mr. Sloan. They are at that price this year and were last year. 
Before that the wages were from $24 to $26 a month, and four years ago 
they were $30. 

The Chairman. Do we understand you to say that the price of farm 
labor is decreasing ? 

Mr. Sloan. I say that the present price of farm labor is lower than it 
was two or three years ago. 

The Chairman. Is there a great demand in the agricultural districts, 
or is the labor market overstocked? 

Mr. Sloan. I cannot regard it as overstocked in my immediate neigh- 
borhood, because there is no surplus labor there. The tramp laws have 
driven away all men who look as if they wanted to work and as if they 
were destitute of means to pay for their lodging. That class supplies 
the surplus labor used by the farmers occasionally in cases of emer- 
gency, but that class has been driven away, and the farmer only does 
now such work as he could do himself with the assistance that he can 
get from his neighbors. 

Mr. Dickey. What has been the character of the legislation in this 
State on that subject? 

Mr. Sloan. I am talking about the State of Wisconsin where I live, 
30 miles north from here. It is made a criminal offense (except in the 
case of women and boys under a certain age) for any person to ask for 
food at a dwelling, and it is punishable by commitment for vagrancy on 
the complaint of the party who is asked for food, or of the officer who 
may have a knowledge of it. 

Mr. Dickey. For what term is the imprisonment? 

Mr. Sloan. From 10 to 30 days, I believe, and perhaps longer in cases 
of confirmed vagrancy. 

Mr. Dickey. Do you mean for simply asking for food ? 

Mr. Sloan. That I understand to be the law. 

The Chairman. That does not apply to the resident population of a 
district, but to persons who are traveling around without any destina- 
tion and who come under the definition of tramps? 

Mr. Sloan. Yes. Since I went on a farm the country has been 
flooded with people, three-fourths of whom were willing to work. I have 
been shocked to see them — sometimes men of education and men who 
had good trades, men whose hands were hard with labor and whose 
faces were intelligent. But since the enactment of that law these people 
have left that State. Formerly I have seen from six to ten of them 
every day for weeks on the high road and on the railroad between Mil- 
waukee and Chicago seeking employment and glad to get it at any price. 
I have hired during that time at least 50 men off the road. There is a 
prejudice among the farmers against that class — a prejudice created by 
the newspapers — the farmers not having sense enough to look at a man's 
hands, and to see that three-fourths of them were really working men 
out of employment. 

The Chairman. What time do you fix this at as a common thing in 
your vicinity? 

Mr. Sloan. During the five years that I have been there, up to the 
passage of this law. I was informed by an attorney in Bacine that the 



DEPRESSION IN LABOR AND BUSINESS. 23 

former sheriff drew from the county, either in one year or in his term of 
office (I forget which), $12,000 for provisions furnished to tramps under 
a former law. I prefer to suppose that it was during the term of the 
sheriff's office. 

The Chairman. Since the passage of this law making it a punish- 
ment for that class of people to be found asking for food, has the class 
disappeared entirely? 

Mr. Sloan. It has. It was in conversation about these people that 
the attorney told me that the present sheriff was making no money in 
his office comparatively to his predecessor, it being the privilege of the 
sheriffs in Wisconsin to receive from the State either 83 or $3.50 per 
week for boarding vagrants, and it being the interest of the sheriff to 
board them, as he can do so for 50 cents a week. 

The Chairman. Do you have convict labor in Wisconsin f 

Mr. Sloan. Yes, I believe, in the penitentiary. My business is here 
in Chicago, and I have only current knowledge of things in the State of 
Wisconsin, although my farm is there. My principal business, however, 
is here in Chicago. 

The Chairman. Under the laws of Wisconsin, are the prisoners 
farmed out in differeut occupations as is the case in some of the other 
States, and does their labor come in competition with the free labor of 
the State? 

Mr. Sloan. I am not sure about that, but I think not. 

The Chairman. With reference to labor-saving machiuery, what effect, 
in your judgment, has that upon labor f 

Mr. Sloan. It ought to have a beneficial effect upon labor. 

The Chairman. In what way % 

Mr. Sloan. Labor-saving machinery creates more labor and reduces 
the cost of the article in the production of which it is used; and in both 
these respects it is a benefit to labor. If it comes in competition with 
the laborer himself, it calls for more skill in its use. The reaper calls 
for more skill than the cradle, just as the cradle calls for more skill than 
the sickle, and the demand for more skill secures higher wages. 

The Chairman. Then you think that labor-saving machinery is rather 
a benefit than an injury to the laboring man? 

Mr. Sloan. I say that labor saving machinery is certainly capable of 
conferring the highest benefits on labor, provided that the capital rep- 
resented by labor is met on fair terms by the capital represented by 
machinery. Machinery raises the wages of the men who operate it. It 
increases the area on which agricultural products can be raised, and in 
doing so it affords employment to more men, both in making the ma- 
chinery and in the skillful use of it, than would have been employed be- 
fore. A man with a machine can do as much work in reaping as eight 
or ten men without it. Then the farmer who has a reaper (the area of 
land in the country being still practically unlimited), seeks more land, 
puts in more crops, and hires more men to put in the crop and to do 
necessary work. So, although in the mere act of reaping there are fewer 
men employed, there is a greater number of men employed in the prepara- 
tion of the land, and this increased number, added to the number em- 
ployed in the manufacture of the machinery, and considering the higher 
wages that their skill commands, makes machinery a benefit to labor. 

Mr. Dickey. Do you mean that there are more acres of laud tilled 
now in proportion to the population of the country than there were tilled 
before the invention of agricultural machinery? 

Mr. Sloan. I am not prepared to say that there are. 

Mr. Dickey. Then your argument is a failure? 



24 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Sloan. I did not produce it as an argument, but as a fact. 

Mr. Dickey. If it is true, as you state, that machinery increases the 
demand for labor, there must be more acres tilled in proportion to the 
population than there were before the invention of machinery. 

Mr. Sloan. I did not state there were or that there were not. I am 
not prepared to say, but it is presumable that there are more acres tilled 
in proportion to the population. There are certaiuly more acres tilled 
in proportion to the farming population. There is no question of that, 
because with a sulky-cultivator one man can cultivate three times 
as much corn as with a cultivator that he walks before ; and he could 
cultivate with one that he walks before ten times as much as he could 
with a hoe. 

The Chairman. Does not that dispense with ten men 1 

Mr. Sloan. I do not see that it does, because there are other men 
needed to put in the crop. 

The Chairman. Let me turn your attention to the price of corn and 
wheat — staples of Wisconsin. How are the prices to-day compared with 
the average prices for the last six or seven years? 

Mr. Sloan. I have not followed the market with sufficient closeness 
to enable me to answer your question with certainty, but I know that 
the price of wheat is lower today than it was two years ago. 

The Chairman. What is the price of wheat there to-day ? 

Mr. Sloan. From 70 cents to 80 cents a bushel. 

The Chairman. What is the price of corn ? 

Mr. Sloan. Last year corn was from 15 to 25 cents a bushel. Some 
of the corn last year was not good, and 155 cents was a good price. 

The Chairman. How was it with oats^ 

Mr. Sloan. Oats were 22 cents a bushel last year. 

The Chairman. Is that a good average price % 

Mr. Sloan. No, sir. Two years before that oats were worth 30 and 
35 cents a bushel, and wheat was worth $1.25. 

The Chairman. Then the times are not mending in regard to the 
prices of cereals 1 

Mr. Sloan. Not yet. If the times have mended in Chicago, the 
movement has not yet reached us. 

The Chairman. Do you have money enough up there to get along 
with your business affairs ? 

Mr. Sloan. I do not think we have. ' The rate of interest on mort- 
gages on good improved property is 8 per cent. Such security is as 
safe as United States bonds, as the mortgages provide that the expense 
of collection shall be paid by the borrower, and as the property is al- 
ways estimated on a low valuation. 

The Chairman. What is the legal rate of interest iu Wisconsin? 

Mr. Sloan. Eight per cent.; and 10 per cent, is allowable. 

The Chairman. Are the farmers generally in a prosperous condi- 
tion ? 

Mr. Sloan. It is with the farmers there as it is in other places. The 
energetic and industrious men who have labor in their own families and 
who are successful in special crops (such as strawberries, for instance), 
lay by something, but the ordinary farmer, who raises the ordinary 
cereals, and who does not raise special crops, is stationary — is not pro- 
gressing. 

The Chairman. As a general rule, are the farmers there free from 
debt, or is their property encumbered with mortgages'? 

Mr. Sloan. A great number of mortgages on farm property are on 
record . 



DEPRESSION IN LABOR AND BUSINESS. 25 

The Chairman. What was the cause of these mortgage debts ? Are 
the mortgages for the purchase mouey of the farms or are they for money 
borrowed for speculative purposes ? 

Mr. Sloan. In the flush times men bought land on the supposition 
that, with a few years' average crops, they could pay off the indebted- 
ness. This was the reason that induced most of them to purchase 
laud. 

The Chairman. Then the debt has been created merely with a de- 
sire to add a number of acres to the land already possessed by the 
farmer? 

Mr. Sloan. The debt has been created with the intention on the 
part of the farmer of getting along in the world and acquiring more 
wealth. 

Mr. Dickey. Do you consider that there is now a depression in labor 
and in the business interests of the country % 

Mr, Sloan. I have been familiar with Chicago for 15 years. I have 
been over it in daylight and at night, and I know it thoroughly. The 
parks themselves will give any man an answer to the question whether 
there is a surplus of unemployed labor here. The parks are full of idle 
men to-day. Up to four years ago such a state of things was very rare 
in Chicago. All the people were employed, but now you find on the 
corners of the streets here, and hanging around the railings that sur- 
round the entrance to the business places, crowds of idle men during 
working hours. 

Mr. Dickey. Are these mere idlers who do not want to work, or are 
they men who would work if they could get work to do*? 

Mr. Sloan. When I look at them I see on their faces and on their 
hands traces of a life of work, and I know that they are working- 
men. 

Mr. O'Connor. Were any of those signs of depression visible prior to 
the 1st of January, 1875 ? 

Mr. Sloan. Very little of them. There were idlers then such as you 
will see in Clark street and in Exchange alley. There are always such 
idlers in town. 

Mr. Dickey. There being this depression of labor, give us your opin- 
ion as to the cause of it and as to the remedy for it. 

Mr. Sloan. The cause of the present depression in labor, or of the 
lack of employment, is what the commercial world calls a panic, which 
occurred in 1873, the effects of which the country has been struggling 
to get rid of. A panic is a thing that is a natural production periodi- 
cally, and its causes are easily ascertainable. But they are like the 
famous egg of Columbus. The wiseacres could not make it stand on 
end until Columbus showed them how — by cracking the end of it. 
Taking the condition of things as they are now — property being at a 
very low valuation measured by the currency of the country — I should 
say that we are at the bottom of the ladder. 

The value of labor, the value of products, the value of manufactures 
of all kinds in a country, is necessarily governed, in every country, by 
the amount of the circulating medium used to deal in them. What you 
call a dollar, when you have $700,000,000 in circulation, is, when you 
have $1,700,000,000 in circulation, naturally equal to two dollars, be- 
cause the increased circulation swells the value of all the property of the 
country that is dealt in by that medium of exchange. Now, being at 
the base (precisely at the lowest ebb), we have doubtless commenced to 
advance. Jn that advance, as money is loaned on securities, at the end 
of the year an amount of credit-wealth is created by the interest 



26 DEPRESSION IN LABOR AND BUSINESS. 

which is produced ; so that, this year, if you have a hundred cents for 
your dollar, the next year you have 108 cents, and the next year you 
have 116 cents (the interest being at eight per cent.). The money, 
whether it lies in the vaults of the banker or is lent on bond and mort- 
gage, is practically part of the currency of the country ; and every year 
the amount that you add to it by interest increases the relative values 
of the land and property which are measured by it. That is credit- 
wealth. In course of time the products of labor, of agriculture, and of 
manufactures find the accretion of interest too great for them to sup- 
port ; so that, in some ten or fifteen years, as the case may be (accord- 
ing to the rate of interest and to the amount of business done), the 
weight of interest on this credit-wealth absorbs the annual profits of the 
labor of the country. At those times the lender becomes, instead of a 
medium for circulating money, an absorber of currency. He throws into 
the market his bonds, and he calls for what is designated as the legal 
currency of the country. This withdrawal of currency raises the value 
of the remaining currency through the necessity of keeping the balance 
between the currency and all the wealth that is measured by it. And 
in doing so there is produced what you call a panic. As currency be- 
comes scarce it rises in value, and property of all sorts shrinks. That 
is a necessary, inevitable condition, beyond anything in the shape of 
legislation as a remedy, until you have abolished the thing which you call 
interest. 

The Chairman. Briefly, your theory is that panics are produced by 
people getting into debt % 

Mr. Sloan. No. When a man gets into debt he proposes to pay the 
value of the thing. What creates the panic is the increase of what is 
called credit-wealth. After the war we had a circulation of $1,700,000,- 
000. That was an emission of money which would not necessarily have 
produced a panic of itself, if the population and the industry of the country 
had been permitted to grow up until they were prepared to absorb it 
If it was a redundant circulation at the time the war closed, still all 
values were measured by it and all dealings were made on the faith of 
that amount of circulation. It was therefore unjust to change it or re- 
duce it one cent. It would be just as much an injustice to change by a 
law to day the value of a dollar which I am under obligation to pay next 
Saturday. It was just as unfair as it would be to change the length of 
a yard-stick by which goods are measured after my making a contract to 
deliver so many yards. In the one case you enhance the value of the 
dollar, and in the other case you lengthen the yard stick. 

The Chairman. State what, in your judgment, is the remedy to be 
provided. 

Mr. Sloan. The thing remedies itself in time. We are emerging from 
the lowest period of depression and are entering a career of prosper- 
ity ; that is, we are increasing annually our credit wealth. If we can 
reach a point where that wealth is exactly equal to the necessities of 
society, and if we can keep values at a dead level, then we shall have 
accomplished the result, and we shall all be made happy. But the 
country, growing rapidly, requires for its increasing commerce a con- 
tinually increasing amount of money, and the two metals that have 
been selected by the common consent of the world to represent values 
should be left perfectly free in the hands of those who have them, and 
there should be free coinage of both metals to any extent which the laws 
of trade require, or which the interests of the people demand. Money is 
like the ocean : any legislation which attempts to control it is futile. 



DEPRESSION IN LABOR AND BUSINESS. 27 

Its value is not determined in any one country, but is determined by 
the common consent of the world at large. 

Mr. Dickey. Your idea is this : That the government finding the 
people (at the close of the war or a very short time afterwards) with a 
large volume of currency, and largely in debt, committed a great wrong 
in permitting that currency to be contracted and thus reducing the 
value of commodities 1 

Mr. Sloan. I say that it was suicidal, because the prosperity of the 
country demands a proper distribution of the wealth of the country. 

Mr. Dickey. Then the present depression in labor and in industry is 
the result of bad legislation at the close of the war $ 

Mr. Sloan. Yes, sir, and because that legislation tended to an aggre- 
gation of wealth in the hands of the few. 

" Mr. Sherwin. But you think that if the credit wealth of the country 
be increased, everything is lovely I 

Mr. Sloan. Everything is lovely until the panic comes. 

Mr. Sherwin. Then all must be creditors ? 

Mr. Sloan. Not at all. As the amount of currency in the country 
and as the amount of credit wealth in the country increases, it creates 
an increased demand for products. It creates a general average in- 
crease of wealth. That average increase goes on. Every man gathers 
more and more until the panic comes, and then a few come in and reap 
the harvest. 

Mr. Sherwin. What is credit wealth 1 

Mr. Sloan. Any value created by law which is not an intrinsic 
value. 

Mr. Sherwin. Then it is a debt which somebody owes to another % 

Mr. Sloan. Yes ; it is a debt which government owes to its people, or 
which the people owe on bond and mortgage. 

Mr. Sherwin. That is not wealth at all, is it ? 

Mr. Sloan. We have called it wealth. We make it wealth. 

Mr. O'Connor. What is the relative proportion between the number 
of unemployed laborers in the city of Chicago at the present time and 
the number on the 1st of January, 1875*? 

Mr. Sloan. I have no means of judging except by my eyes. By my 
eyes I should say that there are at least 10 or 15 men unemployed to- 
day in Chicago to the one who was unemployed then. 

Mr. O'Connor. If the industrial affairs of the city were as progres- 
sive as they were in 1875, would there be such a number of unemployed 
laborers ? 

Mr. Sloan. No, sir. 

Mr. O'Connor. Therefore the cause of the large increase in the num- 
ber of unemployed laborers in this city is the stagnation of business ! 

Mr. Sloan. It is owing to legislation compelling men to do with $1 
what they had agreed to do with $2. 

Mr. O'Connor. And that has caused a stagnation or depression in 
business 1 

Mr. Sloan. Yes. Of course men have called on all their resources to 
meet their obligations, which have been doubled by law. 

Mr. O'Connor. Have there been many men of enterprise and energy 
who were wealthy in 1875, and who have been since reduced to poverty, 
in the city of Chicago ? 

Mr. Sloan. Yes ; especially men having property in real estate. 

Mr. O'Connor. The shrinkage has been more apparent in real estate 
property than in any other sort of property ? 

Mr. Sloan. It seems so to me. 



28 DEPRESSION IN LABOR AND BUSINESS. 

Mr. O'Connor. Was there a higher fever of speculation in real estate 
here than there was in any other line of business? 

Mr. Sloan. Everything was supposed to be at its fair value. A lot 
in a suburban town was held at as fair a value as a pair of shoes or a 
pound of coffee. There was a continuous demand for lots. There was a 
prospect for selling lots at retail prices, and parties invested on a value 
which was apparently as fixed and immutable as the value of a pair of 
shoes or a pound of coffee. The suburban lots which in 1874-75 were 
sold at from $1,300 to $1,700 per acre, now go back in the market for 
$300 an acre, and do not find a purchaser. 

Mr. O'Connor. Is it as easy for a man of enterprise and energy to 
borrow money today in the city of Chicago as it was prior to the 1st of 
January, 1875 ? 

Mr. Sloan. I have not had any experience lately in that direction, 
but from what I hear there is nothing that goes now except gilt edged 
property or collaterals, or something that is worth more in the market 
than the amount borrowed on it. 

Mr. O'Connor. Then the great bulk of the loans are made on United 
States bonds as collateral ? 

Mr. Sloan. Yes. 

Mr. O'Connor. The tendency of lenders has been, if possible, to ob- 
tain that security first in preference to anything else? 

Mr. Sloan. Certainly. 

Mr. O'Connor. And in the way of getting loans, all other classes of 
security have been generally ruled out or their consideration has been 
lessened ? 

Mr. Sloan. It is practically impossible in Chicago to-day, uuless un- 
der exceptional circumstances, to negotiate a loan for any reasonable 
proportion of value on suburban property or on unimproved property 
of any description. The lender requires property that is being rented, 
so that in case he is compelled to fall back upon the property, he can 
have his money secured. It was customary in Chicago for a man who 
had a $5,000 lot to borrow $5,000 upon the strength of his property, and 
build a house with that amount of money. Then the lender had $5,000 
in the property and the owner bad $5,000, so that they were practically 
partners in it — one, however, a sleeping partner and the other an active 
one. The active one went to work and put up the building. Then this 
legislation came along and destroyed the value of the property, and the 
result has been that the mortgage has been foreclosed and the property 
sold for $5,000, so that the borrower has lost his full $5,000, and the 
lender has the house and property that are worth $5,000. If the lender 
sees proper to throw that property in the market and to sell it for $5,000, 
he can buy with the money as much wheat or coff. e or boots as he 
could have bought five years ago with $10,000. Therefore, practically 
he has doubled his money, while the other man has lost his altogether. 

Mr. O'Connor. What is the proportion between the debtor class and 
the creditor class in the community? In what relation do they stand 
to each other as to numbers? 

Mr. Sloan. My knowledge is not very extensive on that point. After 
the fire the debtor class was largely increased. There was a great deal of 
capital brought in here aftt-r the fire. All the building that was done 
after the fire was done through insurance money (which was but a small 
fraction of the actual loss) or through loans borrowed on the lots. 

Mr. O'Connor. The debtor class throughout the country at large is 
much more numerous, is it not, than the creditor class? 

Mr. Sloan. So far as my knowledge goes, that is the case. 



DEPRESSION IN LABOR AND BUSINESS. 29 

Mr. O'Connor. Aud (to reduce your testimony to a practical point) 
your conclusion is that the retirement aud contraction of the currency 
has been the cause of the shrinkage in values and of the overthrow of 
the vast debtor class throughout the country 1 ? 

Mr. Sloan. The contraction of the currency was the direct cause of 
the panic, although it was not felt for a year or two after the passage of 
the law. That was simply because the machinery was in full motion 
and the fly-wheel did not stop for a year or two. The machinery went 
on whirling after the motive power had been withdrawn. The panic 
would have come anyhow. I certainly agree with other gentlemen on 
that point. Ultimately speculation would have swelled by interest the 
volume of currency in the country to such an extent that labor could 
not meet it. The shrinkage of the currency produces precisely the same 
effect as increasing the volume of products. 

Mr. Sherwin. How much of a farm have you? 

Mr. Sloan. I have a small farm of some 60 acres. 

Mr. Sherwin. Do you farm it yourself? 

Mr. Sloan. Yes. 

Mr. Sherwin. You say that it is not profitable ? 

Mr. Sloan. It has not been for the last three or four years. I only 
know three or four farmers who have made their expenses. 

Mr. Sherwin. How much did a farm hand get in 1850? 

Mr. Sloan. From 50 to 75 cents a day, and about from $12 to $15 a 
month. 

Mr. Sherwin. Is it not a fact that good men could be obtained to 
work on farms at that time at from $8 to $12 a month % 

Mr. Sloan. I do not recollect anybody being hired on my father's 
farm at less than from $12 to $16 a month. There may have been a 
local reason for that. 

Mr. Sherwin. And now you say that the wages are from $20 to $22 
a month ? 

Mr. Sloan. Yes. 

Mr. Sherwin. Is it not a fact that as a rule the farmers throughout 
the west are in a good condition financially? Are not their farms and 
fences and stock in good condition ; and do they not live well ? 

Mr. Sloan. Not as a rule. 

Mr. Sherwin. How frequent is your intercourse with farmers ? 

Mr. Sloan. 1 have daily intercourse with them. 

Mr. Sherwin. How large a circle of acquaintance have you with far- 
mers % 

Mr. Sloan. I do not know very many. I know those in my own 
neighborhood. 

Mr. Sherwin. Are they all strawberry raisers ? 

Mr. Sloan. No ; there are in my neighborhood as good farmers as 
there are anywhere. 

Mr. Sherwin. How do you kuow that there are fifteen men unem- 
ployed now to the one that was unemployed some years ago u ? 

Mr. Sloan. 1 know it by my eyes. 

Mr. Sherwin. Where will you go for your statistics on that point ! 

Mr. Sloan. I told you that I did not go by statistics. I told you that 
I was familiar with the city, and that whereas in former times there 
were few idle men in the parks, there are now a great many idle men. 

Mr. Sherwin. Suppose you go up Dearborn street half a mile, how 
many idle men do you meet ? 

Mr. Sloan. I cannot say. You will not find as many on Dearborn 
street as you will on Clark street. 



30 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Sherwin. How do you make up your judgment as to there being 
fifteen men unemployed now to the one man who used to be unem- 
ployed ? 

Mr. Sloan. My knowledge is based on what I see on the street cor- 
ners around here. I see idle men in the streets during hours when they 
should not be at liberty. 

Mr. Sherwin. Do you find them on Lake street or Randolph street % 

Mr. Sloan. Not so many. 

Mr. Sherwin. You will always find such men in large cities — loafers. 

Mr. Sloan. These are not all loafers. I can tell working men from 
loafers. 

Mr. Sherwin. Have you been to the rolling mills here near the city, 
recently ? 

Mr. Sloan. I have not. 

Mr. Sherwin. You do not know whether they are employing all the 
laborers they can get"? 

Mr. Sloan. I do not. 

Mr. Sherwin. If it should turn out that these mills cannot get labor 
enough to run them, would not that be an indication that labor is 
scarce % 

Mr. Sloan. It would be an indication that the labor which they want 
is scarce. 

Mr. Sherwin. Did you ever hear of labor strikes when labor was 
scarce ? 

Mr. Sloan. That is the time that laborers are apt to strike. 

Mr. Sherwin. There have been several strikes here in the city lately, 
have there not % 

Mr. Sloan. Yes ; but not strikes of the sort you talk of. These 
strikes are the strikes of theorists. 

Mr. Sherwin. There were strikes at East Saint Louis recently, were 
there not 1 

Mr. Sloan. I am not acquainted with the proceedings there. 

Mr. Sherwin. Would not such strikes indicate that there is not a very 
large surplus of idle labor there? 

Mr. Sloan. No ; tbey would simply indicate that the laborers sup- 
posed they were so skillful that the companies employing them would 
be unwilling to part with them. 

Mr. Sherwin. Is a man who loads and unloads grain a skilled la- 
borer % 

Mr. Sloan. I should say he was; I should say that any man engaged 
in any business knows it better than a raw hand can know it. 

Mr. Sherwin. Then, inasmuch as this depression in labor and busi- 
ness has been brought about by the contraction of the currency, your 
idea of remedy would be an inflation of the currency? 

Mr. Sloan. .No, sir; the evil has been already inflicted, and it is too 
late to cure it. You cannot revive a corpse although you may galvan- 
ize it. 

Mr. Sherwin. Do you know what the circulation of the countrv was 
in 1873 % 

Mr. Sloan. I know that in 1864-'65, it was seventeen hundred millions. 

Mr. Sherwin. When was the contraction law passed ? 

Mr. Sloan. I do not recollect. 

Mr. Sherwin. Did that seventeen hundred millions consist of green- 
backs and national-bank notes % 

Mr. Sloan. It consisted of demand notes, Treasury notes, legal ten- 
ders, &c. 



DEPRESSION IN LABOR AND BUSINESS. 31 

Mr. Sherwin. What proportion of the amouut was in legal-tender 
notes ! 

Mr. Sloan. Some four hundred millions. 

Mr. Sherwin. How much of that is in circulation now ? 

Mr. Sloan. Something like three hundred and fifty millions. 

Mr. Sherwin. Then they have not been contracted very much % 

Mr. Sloan. No; they have not been contracted very much. 

Mr. Sherwin. Do you know whether they were contracted at all in 
1873 1 

Mr. Sloan. I think they were a little. 

Mr. Sherwin. Do you know whether national-bank notes were con- 
tracted in 1873 I 

Mr. Sloan. I have no recollection of that: I think that their volume 
was about equal to the volume of legal-tender notes. 

Mr. Sherwin. Then your opinion is not founded on an accurate knowl- 
edge of what the circulation consisted of 1 ? 

Mr. Sloan. It is founded more on scientific deduction from what oc- 
curred before. 

Mr. Sherwin. And it is the same in the case of unemployed laborers 
here ; that is deduction also % 

Mr. Sloan. No ; I have stated that as a fact. 

Mr. Sherwin. How do you get at the fact % 

Mr. Sloan. From inspection. 

Mr. Sherwin. Have you been about the city for that purpose ! 

Mr. Sloan. No ; but I have my eyes open when I do go about the 
city. 

Mr. Sherwin. Did you ever lend any money on a farm 1 

Mr. Sloan. Perhaps I did have a mortgage or two on farms. 

Mr. Sherwin. Did you lend your own money or other people's money % 

Mr. Sloan. My own, generally. 

Mr. Sherwin. Were you fortunate in your loans ? 

Mr. Sloan. No. 

Mr. Sherwin. Were you unfortunate % 

Mr. Sloan. Yes. 

Mr. Sherwin. Do you think that it is the duty of the government to 
legislate for the purpose of helping men who have been unfortunate in 
their business? 

Mr. Sloan. No; I think that it is the duty of the government not to 
legislate at all about such matters; I think that money is a universal 
matter, and that legislation about it is an injury. 

Mr. Sherwin. Your remedy would be to leave things about as they 
are? 

Mr. Sloan. I would be in favor of unlimited silver coinage. 

Mr. Sherwin. You stated that the value of this suburban property 
was stable % 

Mr. Sloan. It was considered to be stable. 

Mr. Sherwin. How is it with the property in Calumet swamps which 
was held at $1,000 an acre I 

Mr. Sloan. The worth of a thing is what it will bring. There were 
men who made loans on that property. 

Mr. Sherwin. And these were the men who got burned % 

Mr. Sloan. They got burned all over. 

Mr. Sherwin. Did you place loans on that kind of property % 

Mr. Sloan. I do not know that I did, but none of us regarded those 
loaus as more risky than other loans. 



32 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Sherwin. Was it not against common sense to lay out lots on 
these swamps and to sell them by the front foot ? 

Mr. Sloan. It requires a man to be here for some time to realize 
whether it was sensible or not. 

Mr. Sherwin. Supposing a man in 1860 had lent $1,000 for five years, 
how much money would he get back ? 

Mr. Sloan. He would get back the principal and about sixty cents 
on the dollar in interest. 

Mr. Sherwin. Did the men who lost money in this way complain 
much of it ? 

Mr. Sloan. Not at all. 

Mr. Sherwin. The war brought on a bonded debt and an irredeema- 
ble paper currency, and produced speculation and panics I 

Mr. Sloan. Yes. That was a part of the losses that the rebellion 
brought about. 

Mr. Martin. These unemployed laborers on the streets that you speak 
of, can you state as a fact that they seek employment and cannot get 
iff 

Mr. Sloan. I state as a fact, from the appearance of the men, that 
they are working men. 

Mr. Martin. Do you state that they have sought employment and 
cannot get it 1 

Mr. Sloan. I do not state that as a fact. 

Mr. Martin. You only state as a fact that you see parties on the 
streets and in the parks whom you judge to be laboring men. You do 
not know whether they have sought employment, but you consider them 
laboring men who are unemployed 1 

Mr. Sloan. Yes. 

Mr. Martin. Would you increase the volume of the currency % 

Mr. Sloan. That would be legislation in the interest of debtors as 
against the interest of creditors. 

Mr. Martin. If you had it in your power, would you, in the interest 
of the whole country, increase the volume of currency to-day ? 

Mr. Sloan. In the interest of the whole country, I should certainly 
legislate for the debtor class, because that class predominates. 

Mr. Martin. Then you would increase the volume of currency ? 

Mr. Sloan. I would make it easier for debtors to carry their burdens ; 
and if increasing the volume of currency would do that I would increase 
it 5 but I believe that it would be unsound legislation. 

Mr. Martin. How much would you increase it ? 

Mr. Sloan. I do not know how much. I would take from the creditor 
class every dollar that you had given to that class and had imposed on 
the debtor class. Every dollar that you would add to the value of 
everything would be practically so much taken from the creditor class. 
I do not know how much I would take from the creditors and give to 
the debtors, but I think, at a rough estimate, that by the war the cred- 
itor class was deprived of at least 50 per cent, of the value of their bonds 
and mortgages, and that since the war they had been recouped by con- 
traction legislation. I think we ought to have two or three times as 
large a circulating medium as England or France, because any Ameri- 
can who has been in those counties knows that three or four times as 
much money is used here as is used there. 

Mr. Martin. What is the amount of our circulation per capita? 

Mr. Sloan. About $16. 

Mr. Martin. How much would you have it? 

Mr. Sloan. I think it should not be less than 



DEPRESSION IN LABOR AND BUSINESS. 66 

Mr. Martin. Tueu you would increase the circulation threefold 2 

Mr. Sloan. I would make it so that it would be able to dp the busi- 
ness of the country. 

Mr. Martin. If the circulation were to be increased threefold, would 
that fact make you a dollar richer unless ^ou had something with which 
to get some of this money? 

Mr. Sloan. Not one cent. 

Mr. Martin. So that the increase of the circulation would be of no 
benefit to anybody unless he had something to sell ? 

Mr. Sloan. It would be of no benefit to anybody who could not 
get it. 

Mr. Martin. If the circulation were increased and if you had nothing 
to sell, the increase would be practically of no benefit to you ? 

Mr. Sloan. It would not make a particle of difference to me, except 
that it would give an impetus to labor, and I would be sure to get em- 
ployment at higher wages. 

Mr. Martin. I understand you to say that the panic of 1873 would 
have come anyhow ? 

Mr. Sloan. Yes. 

Mr. Martin. On account of natural causes"? 

Mr. Sloan. Yes. 

Mr. Martin. Then the contraction of the currency was not the cause- 
of it? 

Mr. Sloan. It precipitated it. It did in a moment by legislation what 
natural causes would have done ultimately. 

Mr. Martin. The panic would have come whether there was contrac- 
tion or not ? 

Mr. Sloan. Certainly. 

Mr. Martin. Wheu did the panic come? 

Mr. Sloan. 1S73. 

Mr. Martin. If the circulation that we had in 1871, '72 and 73 had 
been continued, we would still have had the panic? 

Mr. Sloan. We woald have had it anyhow. 

Mr. Martin. Therefore the contraction of the currency simply pre- 
cipitated the panic ? 

Mr. Sloan. Yes, arid it intensified it. 

Mr. Martin. You say that the improvement in machiuery has been a 
benefit to the farming interest? 

Mr. Sloan. Decidedly. 

Mr. Martin. How many acres can a man plow with a sulky plow? 

Mr. Sloan. Four or five acres a day. 

Mr. Martin. How many acres could he plow with his horse and plow? 

Mr. Sloan. Three acres, but he can do the work with a sulky plow a 
great deal more easily. 

Mr. Martin. Dues not the use of improved machinery throw out of 
employment a great number of laborers? 

Mr. Sloan. Not at all. Laud is too cheap in this country for such an 
effect to be produced. 

Mr. Martin. If, by the use of machinery, one man can do the work 
of ten men, are not nine men thrown out of employment thereby ; ; 

Mr. Sloan. Not at all, because what it takes one man to reap with 
improved machinery it took ten men to sow, and certainly half the 
work of farming is in the preparation of the ground. 

Mr. Martin. Then your doctrine is that improved mamuicty is actu- 
ally beneficial to the farmer ? 

Mr. Sloan. Yes ; it enables him to do more work at less expense. 
H. Mis. 5 3 



34 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Martin. But the greater number of hands that the farmer is en- 
abled to dispense with are thrown out of employment ? 

Mr. Sloan. Yes, so far as that goes, but the very facility which ma- 
chinery gives to agricultural pursuits develops the territory to such an 
extent tbat the laborer finds employment elsewhere? 

Mr. Martin. These farm mortgages that you speak of; are any of 
them created (or supplies to raise the crops with % 

Mr. Sloan. In some cases they are; in the cases of very small lots. 

Mr. Martin. Do the fanners produce enough to pay off these mort- 
gages! 

Mr. Sloan. If that is all that the mortgage is for, it is generally paid. 

Views of Mr. Charles Randolph. 

Mr. Charles Randolph appeared before the committee in response 
to its invitation. He stated in reply to preliminary questions that he 
has been a resident of Chicago since 1851 ; that he is secretary of the 
board of trade, and that he has held that position for ten or eleven 
years. 

The Chairman. Being in that position and having a knowledge of 
the trade of the city, state in general terms what is the condition of 
trade and business in this city compared with its average condition 
within the last seven years ? 

Mr. Randolph. From my own observation and from what I hear 
from gentlemen who are more familiar with details than lean be, there 
is no question in my mind but that the general business of this city 
has been steadily improving since the fire in 1871. I speak of the mer- 
cantile business of the city. After the panic of 1873, there was a con- 
tinuous decline in values in realty in this city, as there was everywhere 
else. It did not all culminate in one day or in one month, but the de- 
cline coutinued for several years. The panic did not squeeze all the wa- 
ter out of it at once. But every indication seems to point now to the fact 
that the values of real estate are rather on the rise, except as to a large 
amount of property around the city, which is purely speculative, for 
which there is no use now, and will not be for a generation, either for 
business or residence purposes. There is no recuperation in that kind of 
property, and will not be for a long time. But the mercantile business 
of the city is certainly improving in volume and in its remunerative 
results to the merchant. 

The Chairman. How is it with other branches of trade? , 

Mr. Randolph. The manufacturing interests, I understand, are work- 
ing on a small margin, but they are busily employed pretty generally 
throughout the city. Perhaps there are more manufacturing industries 
in actual operation to-day than there ever were before in this city. 

The Chairman. And how is it with regard to other branches of in- 
dustry ; stock, grain, &c? 

Mr. Randolph. The trade in agricultural products has been increas- 
ing very largely. Our trade last year was very much in excess in point 
of volume to what it was before. Our trade in agricultural products 
(grain and stock) is about the same this year as it was last year. This 
indicates a general improvement, for the reason that in a large portion 
of the Territory, directly tributary to this city, there was a very short 
crop last year, and still even with that the business of this year is as 
large, or perhaps a trifle larger, than the business of last year. The 
wheat crop of Minnesota and Iowa, which is largely marketed here, 
was small last year. 



DEPRESSION IN LABOR AND BUSINESS. 35 

The Chairman. Do we understand you to give it as your opinion , 
that from 1873 up to the present time there has been a steady, continu- 
ous improvement in these branches of trade ? 

Mr. Randolph. No, sir; I mean to say that in dry goods, groceries, 
hardware, iron, and such articles, the volume of the business has been 
increasing year by year. I do not think it has been increasing in value 
(although some claim that it has been increasing even in value,) because 
it would require a very large increase in volume to keep up an equal 
amount in value. In agricultural products, the business has been stead- 
ily increasing, with one or two exceptions, where there has been short 
crops. In manufacturing industries, however, there has not been a 
steady increase. It is only, perhaps, within the last two years that 
they have begun to get more fully employed. 

The Chairman. Has this city been an exception to the rest of the 
country and to the world iu regard to success in business? 

Mr. Randolph. In a general way I think it has been. 

The Chairman. For the better i 

Mr. Randolph. I think very emphatically that the Northwest aud 
the portion of country depending on the Northwest are altogether in 
better shape than any other part of the country. 

The Chairman. You have not been subject to the paralysis which 
the Eastern States have gone through ? 

Mr. Randolph. To some extent, of course, we have been. One in- 
dividual may have lost all the wealth he had when he thought he was 
very wealthy, but still the wheels of trade have moved along. 

The Chairman. In the anthracite coal trade, in my district, there 
has been absolute prostration, and many of the prominent men in it 
have gone into bankruptcy. 

Mr. Randolph. It has been so to some extent here, but I had the 
idea that the production of anthracite coal has increased very much. 
(The Chairman. What is the average shrinkage in the value of real 
estate in this city, comparing the present time with an average of five 
years back ? 

Mr. Randolph. It would he but a guess on my part, but I should say 
that the shriukage between 1873 and to day would be from forty to 'fifty 
per cent. 

The Chairman. To what cause do you attribute the shriukage of value 
in real estate ? 

( Mr. Randolph. Partly to the fact that real estate was grossly inflated 
before, and that it has been undergoing the influence of that distrust 
which attaches to all property more or less since the panic. "\ A good 
deal of the property in the city has declined very much more than that, 
and other property has declined less, but all of it is affected more or 
less by distrust, by lack of disposition to invest, and by the uncertainty 
which has prevailed from 1873 till now. And, as I said before, a good, 
deal of it was of no value for business or residence purposes, and will 
not be tor generations to come. ' 

The Chairman. Was there anything growing out of the depression 
of business that produced a depression in the value of real estate ? 

Mr. Randolph. To some extent. Of course merchants have been 
obliged to do business on a less margin ot profit, and caunot pay so 
much rent either lor their stores or their dwelling houses. That of 
course caused a reduction of revenue in such classes of property, and 
as the value of property is of course estimated by the revenue which 
it will produce, its price has fallen accordingly. 

The Chairman. Mr. Gage has stated that within the last twelve or 



36 DEPRESSION IN LABOR AND BUSINESS. 

eighteen mouths there have been manifest evidences of improvement 
both in business and in the increase of values. What is your judgment 
about that? 

Mr. Randolph. My judgment is, as I said before, that within a year 
or two past almost al! interests have materially advanced and improved 
in this city, especially the manufacturing interest. Before that labor 
was abundant, and a large number of people were unable to get employ- 
ment of any kind. I do not find that that is the case now. 

The Chairman. What is the rate of taxation of real estate in this 
city ? 

Mr. Randolph. I think it is about 6 per cent, on the assessed valua- 
tion. 

The Chairman. At what rate is property assessed in this city? 

Mr. Randolph. The law requires property to be assessed at its full 
value, but it is really assessed at from 30 to 50 per cent, of its real value. 

The Chairman. Are we to infer that your rate of taxation on real es- 
tate is below 2 per cent, of the actual value of'the property? 

Mr. Randolph. I think it is. I think that the real estate of this city 
is assessed at considerably less than one-third of what the owners would 
be williug to take for the property. Assuming that to be the fact, and 
that the taxation is G per cent, on the assessed value, the taxation on 
real value would be about 2 per cent. 

The Chairman. What proportion of the real estate of this city has 
changed hands within the last five years in consequence of tax sales? 

Mr. Randolph. The title does not pass with the tax sale. The amount 
of property that is sold for taxes is very large, but the property is re- 
deemable afterwards; and it has been pretty usual here for persons who 
are not in a condition to pay their taxes to let their property be sold 
subject to redemption afterwards. Sales under those circumstances 
have been very extensive, but the owners have not lost their title. 

The Chairman. Can you give us an approximate estimate of the pro- 
portion of real estate iu this city that, has been sold for taxes? 

Mr. Randolph. No, sir ; I cannot. 

The Chairman. I remember seeing in the Inter Ocean a big roll of 
property to be sold for taxes. 

Mr. Randolph. Yes, sir; 25 or 30 pages of that paper. But the 
amount of property advertised for sale is of course much larger than 
that actually sold. Still, the property that is sold for taxes is very large 
indeed. 

The Chairman. I am told that the property can be redeemed on the 
payment of 25 per cent, additional? 

Mr. Randolph. I do not know exactly what the costs are. It would 
depend upon the time within which the property is redeemed. I think 
that of the taxes of 1873-'74 there is still about a million and a half of 
dollars due to the city not yet collected. 

The Chairman. I believe that a large portion of the burnt district is 
covered by mortgage loans? 

Mr. Randolph. Yes, a large proportion of it; 1 do not know how 
much. 

The Chairman. You cannot give an approximate estimate on that 
point? 

Mr. Randolph. No, sir, neither as to amount nor as to the percent- 
age of lots; but we are very largely indebted. 

The Chairman. Do you mean as a municipal corporation ? 

Mr. Randolph. No, sir; we are not largely in debt as a municipal 
corporation. Our municipal debt is only about thirteen millions. 



DEPRESSION IN LABOR AND BUSINESS. 37 

The CHAIRMAN. Large debts were necessarily incurred by individuals 
in the rebuilding of stores aud dwellings in the burnt district I 

Mr. Randolph. Very large, and at very extravagant rates. That 
has been one of the causes of the great suffering (so to speak) of the 
real-estate owners in this city. To a large extent, the rebuilding which 
was pushed forward with unexampled rapidity was done at au extrava- 
gant rate of expense. People were desirous of getting their property 
into a position that it would pay them a revenue, and were regardless 
of cost iu buildiug. They were certainly regardless of any close econom- 
ical figuring in the matter, aud were paying sometimes three times as 
much for the building as it would cost to-day. 

The Chairman. Did a majority of the people who rebuilt borrow the 
money for rebuilding? 

Mr. Randolph. Yes. 

The Chairman. Did that money come from the city? 

Mr. Randolph. Some of it came from the city, but most of it came 
from abroad. A good deal of it had been loaned here before, and it was 
merely a reloau. The rate of interest was pretty high, and the rate of 
expenditure in building was frightfully high. Of course this produced 
a great deal of embarrassment when the shrinkage came, and mauy 
people were utterly wrecked by it. 

The Chairman." Taking all your industries into account, do you re- 
gard this city as in a sound, healthy, prosperous condition at this time ? 

Mr, Randolph. The municipality is in a very prosperous condition. 
As to the mercantile and business men of the city, I think that they are 
as prosperous as the average of the last several generations. Of course 
there are exceptions. Some of them are exceptionally prosperous, others 
the contrary. But they may be said to be in a general condition of pros- 
perity — not such as we had in 1862, 7 3, ? 4, and '5. 

The Chairman. You were in the clouds then % 

Mr. Randolph. We did not know where we were; whether on foot 
or on horseback. 

The Chairman. You have had a very general and severe depression 
here ? 

Mr. Randolph. Yes. 

The Chairman. What time do you fix as the time of your greatest 
financial trouble here? 

Mr. Randolph. Perhapsjluring 1873-'4; say the latter part of 1873. 
It came very suddenly here as everywhere else. Commercial embarrass- 
ments were severe at that time. But real estate hardly began to feel 
it before the latter part of 1874. Owners of real estate did not get a. 
realizing sense of the depression in it until 1874, and that depression 
continued up to last year before a bottom seemed to be touched. 

The Chairman. Do you date the improvement in the history of this 
country and municipality from 1874? 

Mr. Randolph. As to our municipality there has been no especial 
change at all, except that during one or two of those years there were 
necessarily some changes in municipal management, but they did not 
affect the general result. Commercially, I should say that we did not be- 
gin to advance sooner than about 1876. There were two or three years 
of depression following the panic. 

The Chairman. Since 1876, your advance has been gradual and cer- 
tain ? 

Mr. Randolph. I think so. 

The Chairman. And is continuing now ? 

Mr. Randolph. Yes, sir ; I say so most emphatically. 



38 DEPRESSION IN LABOR AND BUSINESS. 

The Chairman. Do you know anything in regard to the question of 
labor ; whether there is sufficient employment for all who desire to 
work? 

Mr. Randolph. What information I have in that regard would be some- 
what general. I should not be wished to be considered an expert in that 
matter. Of course I have given the subject more or less attention. My 
general judgment is that in what is ordinarily classed as labor (that is 
to say, where the people work by the day or or by the week, or by the 
month) there is no surplus of workers here to-day. In what is some- 
times denominated genteel labor, clerkships, &c, where people want to 
get along doing as little as they can for their living, there is a decided 
surplus of labor here to-day. My idea is that if an employer wants a 
large number of men now to engage in the iron business, for instance, he 
will be at a loss to get them. I am told that that is so. I am told that 
those wanting to employ a large number of men have advertised for 
them, and that several days have elapsed before they could get the nec- 
essary number. 

The Chairman. Have you any knowledge in regard to the prices of 
labor here 1 

Mr. Randolph. Only in a general way. Of course there Is a great 
deal of difference depending on occupations. I was told today that in 
the lumber busiuess where a number of laborers are needed for unload- 
ing lumber (a very hard kind of labor) they are paying 30 cents an hour 
aud that they cannot get as many men as they want to get at that price. 
But that, of course, is transient labor. 

The Chairman. How is the money market herfc % 

Mr. Eandolph. We have more money here than we know what to do 
with. 

The Chairman. More money at what rate % 

Mr. Randolph. At about half what it ever was before in this city up 
to within the last two or three years. You can get money at four and 
five and six per cent. 

The Chairman. On call ? 

Mr. Randolph. Not on call; but on short paper. On call you can 
get it at less. 

The Chairman. The paper must be gilt-edged 'I 

Mr. Randolph. It must be good paper. But in this city there is 
comparatively little of the large volume o£. unsecured paper floating 
around that there is in Eastern cities. A great bulk of the paper offered 
for discount here is accompanied by collaterals. That makes it a bet- 
ter class of paper, so that lenders do not inquire here so much as they 
do in the East whether the paper is gilt-edged or not. 

The Chairman. The banks do not, of course, loan on mortgage % 

Mr. Randolph. Not as a rule. Sometimes they do, aud get caught 
at it. 

The Chairman. Does not the law prohibit that? 

Mr. Randolph. Yes, but banks sometimes get caught with mort- 
gages given as security for bad debts, and they find themselves once in 
a while loaded up with real-estate security. 

Mr. O'Connor. So that they are not prevented by the banking law 
from taking real estate property as security 1 

Mr. Randolph. They are, but there is no law against their buying 
in property under execution, aud they get it in that way. 

The Chairman. Is there money enough in this city to supply all the 
demands of the business men engaged in the different branches of trade 
here ? 



DEPRESSION IN LABOR AND BUSINESS 39 

Mr. Randolph. Undoubtedly there is. 

The Chairman. There is no question about that ! 

Mr. Randolph. No, sir. 

The Chairman. Has there been for, say, a period of five years ? 

Mr. Randolph. It has assumed a somewhat different shape within 
that time. Within the past five years there has been an abundance of 
money here that cau be loaned on something that is convertible. On 
call loans I think there has been a surplus of mouey here during the 
whole five years; but within the last two or three years the general 
tendency has been to look for something a little more permanent, and 
now there is a surplus of money here in the banks because people do 
not find channels in which to invest it. 

The Chairman. If business should increase in this city so as to re- 
quire double the amouut of mouey that is now required, would there 
still be money enough here to supply that demand ! 

Mr. Randolph. That is a question which has &uch a broad bearing 
that it is almost impossible for me even to form an estimate. My im- 
pression is that we could very easily do double the amount of business 
that we are now doing if things were on a basis in which the people had 
confidence without having a dollar more of so-called money. Actual 
money enters but a very small percentage into the volume of transac- 
tions. I know no reason why the volume of productions might uot be 
doubled in the Northwest without a dollar more of so-called money. 

The Chairman. Have the failures among business men beeu numer- 
ous here? 

Mr. Randolph. Yes, very large. 

The Chairman. To what cause do you attribute those failures as a 
general rule? 

Mr. Randolph. Taking the failures, and disconnecting them alto- 
gether from bankruptcy proceedings, I should say that they were mainly 
owing to shrinkage in values. There has been in the bankruptcy list a 
vast number of parties who have been bankrupt for years, and who 
merely went into bankruptcy in order to wipe out old scores. That 
ought not to be charged to any recent occurrences. B mkruptcy was 
the only means that these people had of getting rid of old debts which 
they never expected to pay. Perhaps more than one-fourth of the bank- 
rupts that have passed through the district court here have beeu of that 
character. But there have been a great many current failures from the 
shrinkage in values. Many men, after the fire, uudertook to struggle 
th.ough, carrying a lot of debt which they believed they could pay, but 
they failed, and finally they had to go to the wall. There were men 
who were really bankrupts immediately after the fire, but who did -not 
default for years afterwards. 

The Chairman. Thea depression in business had not so much to do 
with your failures here as shrinkage in values had 1 

Mr. Randolph. Certainly not. 

The Chairman. Notwithstanding the failures and the bankruptcies, 
the general current of business went on i 

Mr. Randolph. Yes. 

Mr. Dickey. You say that the shrinkage in values was caused by 
distrust ! 

Mr. Randolph. Only partially. The prime cause, I should say, was 
that the price of. real estate was entirely too high before. R^al estate 
was inflated. After it went down, there was of course a great deal of 
distrust in any assumed values that were established afterwards. We 
were running here for a number of years on a kite-flying arrangement. 



40 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Dickey. What caused that distrust? Was it produced by local 
operations in Chicago, or by the action of the government on the finan- 
cial question ? 

Mr. Randolph. So far as local affairs are concerned, of course after 
this decline of nominal values commenced, nobody knew where it was 
going to stop. We do not kuow whether it has reached the bottom yet. 
A good many persons invested in real estate when they thought f Iiat 
they were at the bottom, and then they lost money still. But the un- 
certainty of everything connected with governmental proceedings in 
relation to the currency has had the tendency to keep everybody more 
or less unsettled and undetermined as to what he can do or ought 
to do. 

Mr. Dickey. Did not the demonetization of silver in this country 
depreciate real estate here? 

Mr. Randolph. Not a particle. 

Mr. Dickey. It did not strike it down ? 

Mr. Randolph. It did not strike anything down, because at the time of 
the demonetization of silver there was no silver money in use in the 
United States. 

Mr. Dickey. Was there no silver money in the United States at that 
time? 

Mr. Randolph. None that was used as money. 

Mr. Dickey. About that time, was there not a large amount of silver 
coming into the market from the mines? 

Mr. Randolph. Yes, just the same as wheat was coming into the 
market. There was a large amount of silver bullion sold. 

Mr. Dickey. Then you do not think that the demonetization of silver 
had any effect? 

Mr. Randolph. None whatever. 

Mr. Dickey. Did the remonetizatiou of silver have any effect upon 
the value of real estate ? 

Mr. Randolph. 1 think it had. I think that it appreciated real estate 
and business and helped it. 

Mr. Dickey. You think that this municipality is in a first-class condi- 
tion? 

Mr. Randolph. I do. 

Mr. Dickey. It is in debt about thirteen millions of dollars? 

Mr. Randolph. Yes. 

Mr. Dickey. How much is due to it for uncollected taxes? 

Mr. Randolph. Over and above the taxes of last year, I think there is 
about three millions due to it. 

Mr. Dickey. The property on which this tax was levied has been 
offered for sale, and has failed to procure purchasers. Is that the reason 
why the taxes are unpaid ? 

Mr. Randolph. O, no ; the property was sold, but tax-sales do not 
carry titles. 

Mr. Dickey. But when property is sold for taxes, does not the pur- 
chaser pay the tax ? 

Mr. Randolph. Yes, I think so. 

Mr. Dickey. Then why is this large amount of uncollected taxes in- 
creasing all the time? 

Mr. Randolph. I cannot explain why the money is not in the treas- 
ury. 

Mr. Dickey. What class of property is generally sold for taxes ? 

Mr. Randolph. If I were going to designate the tax-payers by 
classes I should say that the property that was sold for taxes was gen- 



DEPRESSION IN LABOR AND BUSINESS. 41 

erally the property of the wealthier classes who ought to pay their 
taxes, and who can do it. I think that that is true as a rule. 

Mr. Dickey. That property is also all mortgaged I 

Mr. Randolph. Not necessarily all of it. Some of the wealthiest 
men in this city have allowed their taxes to go unpaid. 

Mr. Dickey. What is the cost of running this municipal government ? 

Mr. Randolph. I am not so well posted on that as I should be, but 
my impression is, taking the city and county together (and they should 
be considered as a whole), that the cost is somewhere in the neighbor- 
hood of from three and a half to four millions of dollars — that is, for cur- 
rent expenses. 

Mr. Dickey. Do you know the number of policemen employed in this 
city? 

Mr. Randolph. No, sir. 

Mr. Dickey. Do you know how they are paid ? 

Mr. Randolph. They are paid by taxation. 

Mr. Dickey. Does this city issue scrip ? 

Mr. Randolph. Yes. 

Mr. Dickey. What class of its creditors does it pay in scrip ? 

Mr. Randolph. Everybody. 

Mr. Dickey. Is that scrip at par, or has it to be shaved? 

Mr. Randolph. Ii has to be shaved because it is not payable for a 
year. It is shaved probably at about 6 per cent. 

Mr. Dickey. You think that a city is in first-class condition which 
owes thirteen millions of dollars, which cannot collect its taxes, and 
which has to issue scrip that is at a discount of 6 per cent.? 

Mr. Randolph. I do; but on that statement of course I would say 
that there was a screw loose somewhere. The constitution of this State 
prohibits the city from increasing its debt over and above a certain 
amount. We had exceeded that amount of indebtedness on our very 
low valuation, and the result was that we can borrow no money on any 
terms. Everybody knows that the taxes of a city do not come in for at 
least a year, and as we cannot borrow money, where is the city to get 
the money to defray its current expenses except by the issue of scrip? 
If that scrip can be discounted at 6 per cent, per annum, I think it shows 
a pretty good condition of our treasury. r ihe city, it is true, is in debt 
thirteen millions of dollars, but Cincinnati, which is not nearly so large, 
and which has not one-fourth the property to show in proportion to its 
indebtedness, has a debt of about twenty-two millions. Everybody 
knows the debt of New York, Brooklyn, Boston, and other great cities. 
There is not a large city in the country, 1 imagine, that has as much 
property in proportion to its debt as Chicago has. I say, therefore, 
without any fear of successful contradiction, that Chicago is in a good 
condition financially. 

The Chairman. What is the cost of your water-works here? 

Mr. Randolph. I cannot tell you, but it is very large. 

Mr. Dickey. What does the city pay its laborers? 

Mr. Randolph. I think a dollar and a half a day. 

Mr. Dickey. And that is paid in scrip ? 

Mr. Randolph. Yes. 

Mr. Dickey. Do you know what amount of scrip the city has issued? 

Mr. Randolph. I should judge about three millions, but that is a 
guess. 

Mr. Sherwen. is there any different law in regard to the collection 
of taxes in Chicago and throughout the State generally? 

Mr. Randolph. I think not. 



42 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Sherwin. If taxes are not paid the. land is forfeited, and the tax 
is carried on to next year's levy? 

Mr. Randolph. I believe so. It is held by property owners to be 
cheaper to let the laud go, and to pay the forfeituies on it, than it is to 
pay the tax at an inconvenience. 

Mr. O'Connor. When did the shrinkage in real estate set in? 

Mr. Eandolph. Immediately after the panic of 1873. 

Mr. O'Connor. When did it culminate ? 

Mr. Randolph. I should think that, on what may be called outside 
property, it culminated in 1871-'75. That property was utterly dead. 
It could not be sold at any price. Perhaps a year later it culminated 
on the inside property, which had a market value. 

Mr. O'Connor. Has there been no decline since 1875? 

Mr. Randolph. Not on the inside property. As to this outside prop- 
erty, it is hard to tell when the decline began or stopped, because there 
was nothing doing in it. It was utterly dead. It was all very active up 
to the time of the panic in 1873, and then nobody would have it at auy 
price. 

Mr. Sherwin. Do you know of any legislation that Congress can en- 
act to affect the relations between this city and its laborers, or to affect 
the credit of this city ? 

Mr. Randolph. I think that Congress had better let it alone in re- 
gard to these matters. 

Views of Mr. Joseph Eastman. 

Mr. Joseph Eastman appeared before the committee at its invita- 
tion. In reply to preliminary questions, he stated that he has been a 
resident of Chicago since 18G8, that he is a contractor and builder, and 
is somewhat interested in real estate. 

The Chairman. Is your business confiued to the erection of buildings? 

Mr. Eastman. My business is in connection with buildings. When I 
came here I was a journeyman, and then I went into a contract for plas- 
tering. 

The Chairman. What is the condition of the building industry now 
compared with its condition in former times? 

Mr. Eastman. There have been less permits taken out for buildings 
this year than in auy year for the last five years. The new buildings 
have been fewer, and they have cost less money. 

The Chairman. How do you account for that? 

Mr. Eastman. A few years ago there was a great deal of building 
done in this city. In fact, building was overdone, and consequently rents 
went down very low, so that it did not pay to put up new buildings. 

The Chairman. Are rents low here now 1 

Mr. Eastman. They have been at about a standstill for the last two 
years. 

( The Chairman. How do the rents now compare with the rents five 
years ago ? 

Mr. Eastman. Rents now are about half perhaps what they were six 
years ago. Some rents have been reduced more and some less, bat I 
think that 50 per cent, reduction is au average, j 

Mr. O'Connor. Do you mean on city property as well as on suburban 
property ? 

Mr. Eastman. I do not know much about suburban property. All 
the property that I handle is property fit for immediate improvement. 



DEPRESSION IN LABOR AND BUSINESS. 43 

The Chairman. Have you been contractor for some of the large 
buildings here? 

Mr. Eastman. Yes, in the plastering business. 

The Chairman. How many men were generally employed by you in 
that business? 

Mr. Eastman. I have employed 200 and 250 men at a time. After I 
got to buying property and to building on speculation, I let the contracts 
out, and probably employed over a thousand men. I put in some five hun- 
dred thousand dollars' worth of propertv here two years ago. That was 
in 1875-76. 

The Chairman. What has been the price paid for labor in the past 
year J ? 

Mr. Eastman. Wages fluctuate more in the building business than 
perhaps in any other business. I am particularly acquainted with the 
plastering business. Men in that business have been paid at one time 
as high as $5 a <iay, and at another time as low as $1.75 a day. They 
are now getting $2.50 and $3 a day. Two years ago they were getting 
$1.75. They are now on a strike for $3 a day, but it is a question 
whether they will get it or not. Some employers are paying it, and some 
are not. Two dollars and a half per day is probably the ruling rate. 

The Chairman. Then there has been an improvement in the price of 
labor over last year 1 ? 

Mr. Eastman. Carpenters, brick-layers, plasterers, and laborers con- 
nected with buildings have had an improvement iu the price of wages: 
but still there is less building done. 

The Chairman. Did you pay your men by the day. 

Mr. Eastman. Yes. 

The Chairman. Did you have any brick laid by the day ! 

Mr. Eastman. I have let out the bricklaying when I had building to 
do. I have let it to brick contractors. 

The Chairman. How is the price of building materials, stone, brick, 
lime, mortar, lumber, &c, now, compared with the average price of six 
or seven years back ? 

Mr. Eastman. The price is considerably less now than it was six or 
seven years ago. We used to pay $1.10 and $1.25 per barrel for lime. 
Now we pay qO cents, 55 cents, and 60 cents. There is not so much 
change in the price of stone. What used to cost $10 now costs $6 or 
$7. Common rough lumber in the yard used to be $14 ; now it is about 
$10. There has been a little stiffening of prices within the last two 
years. 

The Chairman. As a general thing building materials are bringing a 
better price now than they have done for several years past? 

Mr. Eastman. Than they did two years ago. Two years ago was our 
lowest point in building. We could build cheaper two years ago than we 
can to day. There was a general decline in the price of building ever 
since the w^ar, until the fire struck the city, and after that time prices 
went up very rapidly. 

The Chairman. That was a temporary emergency f 

Mr. Eastman. Yes. From 1872 to 1873 prices began to decline again. 
There was a gradual decline in prices from 1866-'7 to 1871, both as to 
wages and everything else. Then wages and building materials rose 
very rapidly for a year or two after the fire, aud from that time until two 
years ago there was a rapid decline. From two years ago up to the 
present time there has been a little tendency upwards in prices in the 
building business. 

The Chairman. Do you pay your laborers weekly ? 



44 'DEPRESSION IN LABOR AND BUSINESS. 

Mr. Eastman. Every two weeks. 

The Chairman. What is the rent of such tenements as laborers oc- 
cupy ? 

Mr. Eastman. The laborers generally pay from $3 to $5 a month for 
each room. A ten-room house within a radius of a mile and a half of the 
city and in a good location rents for about $45 a month. 

The Chairman. What number of hours do the men work here ? 

Mr. Eastman. Ten hours. 

The Chairman. Is that a rule which applies to all business operations 
in this city ? 

Mr. Eastman. To all with the exception of stone-cutters. 

The Chairman. What rule have they ? 

Mr. Eastman. They have the eight-hour rule. 

The Chairman. Why is there a discrimination in their favor % 

Mr. Eastman. It is the result of their union. There was a law passed 
in this State making eight hours a legal day's work, but the law, I be- 
lieve, is a dead letter. I know that the custom is ten hours a day, with 
the exception of stone cutters. Each union makes its own laws and 
regulations, and every man in the union is supposed to stand by them. 
The stone-cutters are the only laborers here who have retained the eight- 
hour system. There was a general movement in 1867 for the eight-hour 
system all over the Northern States, and I think that the stone-cutters in 
this city have carried their point ever since. 

The Chairman. That is the only branch of trade in this city to which 
the eight-hour system applies ? 

Mr. Eastman. Yes, so far as I am aware of in the building line. 

The Chairman. From the knowledge which you have derived from 
your business, do you regard this city as being in a sound, prosperous, 
healthy condition ? 

Mr. Eastman. I have my own ideas about cities increasing in one five 
years, and then ceasing to increase so rapidly in the next five years in 
each decade. I think that that is a general rule, not only probably 
in this country, but in every country. For the last two years I have not 
had much to do, and have been studying political economy considerably, 
and have read up on the subject, and I have formulated a theory of my 
own. 

The Chairman. How do you answer the question which I have pro- 
pounded to you as to whether the business of this city is in a sound, 
healthy condition, with a prospect of its growing better ? 

Mr. Eastman. I think that the prospects of this city for the next 
four years are for the better. Then we will have another panic. There 
is a natural law that will bring it about. 

Mr. Martin. Do you mean to say that we will have another panic 
four years from now % 

Mr. Eastman, Yes j we have reached the highest pinnacle of our 
prosperity. I have traveled considerably over the Northern States. 

Mr. Martin. Have you been down South? 

Mr. Eastman. No, sir, except as far as Nashville. 

Mr. Martin. How much money did you invest in buildings since you 
have been here % 

Mr. Eastman. About $500,000. 

Mr. Martin. Did you make that money here yourself? 

Mr. Eastman. I borrowed it. 

Mr. Martin. Have you paid the debt 1 

Mr. Eastman. It stands as a mortgage on the property. 
, Mr. Martin. Is the property worth the mortgage ? 



DEPRESSION IN LABOR AND BUSINESS. 45 

Mr. Eastman. Yes. 

Mr. O'Connor. You have not been depressed yourself? 
* Mr. Eastman. I am a bankrupt. 

Mr. Martin. What caused jour bankruptcy % 

Mr. Eastman. I suppose bad calculation— building at the wrong time. 
I think I can see where all the trouble lies. 

Mr. Martin. You lost money by your contracts ? 

Mr. Eastman. No ; I bought property, and built it up to sell, and I 
lost money on that. I never lost money on contracts. My opinion is 
that the volume of currency has nothing whatever to do with fluctua- 
tions. 

Mr. Sherwin. Are the plasterers in this city all employed ? 

Mr. Eastman. No ; I believe not. The high price of plasterers' wages 
is the result, to some considerable extent, of their union. They organ- 
ized a union here two years ago. But still the labor market has been 
relieved here by many men going into other fields of labor. There has 
been no revival of business in anything. 

Mr. Sherwin. There has been an increase of wages of 75 cents a 
day. 

Mr. Eastman. More than that. 

Mr. Sherwin. Was that all owing to the operation of the plasterers' 
trades union i 

Mr. Eastman. Not all. The labor market has a tendency to relieve 
itself by natural causes. Men have gone to the mines, and to farms, 
and to Europe. I know six men who worked for me and who have gone 
to Europe, but the labor market in Europe is crushed out now. They 
are on the decline there, while we are on the ascent ; consequently in a 
few years the balance will change, and will bring on a crisis here. It is 
all the result of error in the adjustment of labor in working too many 
hours a day. 

Mr. Sherwin. What is the reason that some classes of laborers, where 
employment is scarce, do not have their wages reduced V 

Mr. Eastman. That is by combination. 

Mr. Sherwin. Are those who are out of employment members of a 
union ? 

Mr. Eastman. Yes. 

Mr. Sherwin. And they forego employment on the behest of the 
union ? 

Mr. Eastman. Yes. Of course if a man is merged into a society he 
is governed by the rules of that society. 

Mr. Sherwin. The rules of that societ3 T are his law, and he is not in- 
dependent so far as seeking employment goes 1 ? 

Mr. Eastman. He is not. 

Mr. Sherwin. What would be the effect, supposing that non-union 
men were to come in here? 

Mr. Eastman. The effect would be to defeat the purposes of the 
union men. 

Mr. Sherwin. Why do not non-union men come here? 

Mr. Eastman. They do come. There is a man here now advertising 
for plasterers and offering them steady employment for the year round. 
He is fighting the union, but these unions have committees appointed 
to go to the railroad depots when they find men coming from outside, 
and give these men money to leave. Then the3' send word to other 
unions informing them of a strike, and asking them not to let their, 
members come here. In that way unions sometimes carry their point. 



46 DEPRESSION IN LABOR AND BUSINESS. 

Always where there is a demand for men the uuion can raise the wages 
of the meu. 

Mr. Sherwin. Bnt always at the expense of some of its laborers'? 

Mr. Eastman. Yes, it is generally expensive. 

Mr. Sherwin. Do not these unions work injustice to many men in 
the unions'? 

Mr. Eastman. But they also work justice. 

Mr. Sherwin. Do you approve of trades unions ? 

Mr. Eastman. I do. 

Mr. Sherwin. Do you approve of the injustice of them? 

Mr. Eastman. I do not. If we were to have trades unions conducted 
properly, they would be a benefit to themselves and to contractors. 

Mr. Sherwjn. State the proper way to conduct a trades union ? 

Mr. Eastman. A trades union should not make any movement in the 
way of raising wages without giving notice to the contractor in time 
euough to let him have a chance to figure ahead, so that he could pay 
them that rate of wages. They should try and work in harmony with 
the contractor. 

Mr. Sherwin. Trades unions make labor scarce. It amounts to that. 
Do you believe in legislating so as to make a scarcity of labor ? 

Mr. Eastman. No. sir. 

Mr. Sherwin. Is not that legislating a scarcity of labor? 

Mr. Eastman. I fancy that that necessarily follows. A trades union 
says, " We will work for such rate of wages ; if you want to pay it you 
will get all the work you need." 1 think they have a right to ask for 
any wages they can get. But they make a mistake, and sometimes fix 
the rate of wages beyond what the demand for labor authorizes, and 
that defeats their purpose. 

Mr. Sherwin. Do you not think that if laborers were left free, with- 
out the control of trades unions, they could go into the market and get 
fair wages, and would not a decrease in the cost of building increase 
the number of buildings put up, thus increasing the amount of labor, 
and be more just to all men ? 

Mr. Eastman. No, sir; the demand for houses is what makes build- 
ing brisk. After the fire here, wages went up almost double, because 
there was a demand for building. The fire necessarily created a de- 
mand for houses. The workingmen knew that their labor was neces- 
sary, and consequently they put up their wages. All building enter- 
prises cost us at least 50 per cent, more after the fire than they did pre- 
viously. 

Mr. Sherwin. There is a great number of laborers here, plasterers 
and bricklayers, and there is not employment for them all. The union 
steps in nevertheless and demands $2.75 a day as wages. There are 
some of the men who would be glad to work at $2 a day, but the union 
says they shall not. Now is not that a tyranny on the part of the union 
upon those laborers ? 

Mr. Eastman. Yes; to a certain extent; but that makes no less 
amount of building. If the rate of wages goes up generally all over the 
country, an inflation of prices is caused, and if there is an inflation of 
prices, real estate goes up, and as real estate goes up building increases. 
It is not governed altogether by the demand for houses but by specula- 
tion, and speculation is caused by fluctuations. The purchasing power 
of money is determined entirely by the rate of wages. 

Mr. Sherwin. Supposing that men engaged in grocery business were 
to combine and say that they would not sell their goods except at cer- 
tain prices; would you consider that just? 



DEPRESSION IN LABOR AND BUSINESS. 47 

£ Mr. Eastman. No, sir ; I believe in free competition. 

"~ Mr. Sherwin. Do not trades unions strike at the very principle of 

free competition ? 

Mr. Eastman. They do. 

Mr. Sherwin. Then you cannot be in favor of trades unions % 

Mr. Eastman. I am in favor of trades unions, provided they are run 
right. I would have them run so that they would not control the action 
of individuals, but only control the custom of the city. 

Mr. Sherwin. I can see how a trades union or any other organization 
of laborers that has a tendency to help each other, and that at the same 
time leaves every person free, is not objectionable j but where a trades 
union undertakes to control labor, it is objectionable; and is not that the 
feature of trades unions today % 

Mr. Eastman. Yes ; they are conducted in that way ; they attempt 
to do by force what they ought to do by lawful means. 

Mr. Sherwin. You say that there was more building done in this 
city a few years ago than there is now, and that that was owing to local 
causes f 

Mr. Eastman. Yes j a part of it ; but in every city there is a general 
law that there is more building done in one five years than there is in 
another five years. 

Mr. Sherwin. How would you dispose of the surplus mechanics in a 
city * 

Mr. Eastman. By reduction of the hours of labor. 

Mr. Sherwin. How would you reduce the hours of labor ? 

Mr. Eastman. By a labor congress. 

Mr Sherwin. Not through legislation % 

Mr. Eastman. I do not think that legislation can reach it. 

Mr. Sherwin. How would a labor congress be able to do it % 

Mr. Eastman. By agreement — by mutual consent. 

Mr. Sherwin. Who would be the agreeing parties ? 

Mr. Eastman. Contractors, manufacturers, business men, and the 
wage workers. 

Mr. Sherwin. You mean a conference between the employers of labor 
and the laborers'? 

Mr. Eastman. Yes. 

Mr. Sherwin. Would that reduction of the hours of labor be benefi- 
cial if it was only local % 

Mr. Eastman. It might relieve certain lines of business where men 
do not i ome into competition, but in any line of business where there is 
free competition it cannot be done. 

Mr. Sherwin. Then, in order to make it beneficial to the laborers, it 
must be universal % 

Mr. Eastman. Yes ; so far as the country goes. 

Mr. Sherwin. And in many branches of industry it would necessarily 
have to extend beyond the country? 

Mr. Eastman. Not necessarily. 

Mr. Sherwin. It would have to do so in regard to articles manufac- 
tured abroad ? 

Mr. Eastman. It would make no difference whatever, because we do 
not import anything without our exporting something else for it, and 
the exchange between the two countries is a material benefit. 

Mr. Sherwin. The profit of course would go to the countries where 
they work ten hours a day? 

Mr. Eastman. The whole error comes in in the misconception of 



48 DEPRESSION IN LABOR AND BUSINESS. 

money. If we were to use a paper money all these protective tariffs 
and duties would be avoided. 

Mr. Sherwin. Are you in favor of paper currency ? 

Mr. Eastman. I am iu favor of the cheapest kind of currency. If you 
can make any currency cheaper than paper I shall be for it, because 
money is simply an ideality — an ideal thing — a measure of labor. 

Mr. Sherwin. How can you measure labor with a thing which is an 
ideality ? 

Mr. Eastman. How do you measure length with a thing which is an 
ideality? 

Mr. Sherwin. You do not. 

Mr. Eastman. What is a foot-rule % A foot is a creation of the mind, 
and the length that it contains is simply an ideality. If you can guess 
the length without the rule yon do not need it at all. 

Mr. Sherwin. So far as the eight-hour question is concerned you are 
not in favor of legislation for fixing the hours of labor by the govern- 
ment ? 

Mr. Eastman. I would be in favor of the government doing it if it was 
practicable. 

Mr. Dickey. I understood you to say that you consider this country 
now as being at the zenith of its prosperity for this decade ? 

Mr. Eastman. Yes. 

Mr. Dickey. Do you consider this country now, its business and 
labor interests, iu a prosperous condition ? 

Mr. Eastman. Only comparatively speaking. It has not the prosper- 
ity that it should have. 

Mr. Dickey. But it has reached as high a state of prosperity as it will 
reach iu this decade ? 

Mr. Eastman. Yes, exactly. 

Mr. Dickey. Can you tell me what can advance the business and 
labor interests of this country J ? 

Mr. Eastman. I know, but it is a loug story. If we would adjust the 
hours oi labor so that it would be as easy for the employee to find em- 
ployment as it is tor the employer to find the employee, then you would 
have a perfect adjustment of labor, because one would be perfectly in- 
dependent of the other. 

Mr. Dickey. How would you do that thing J ? 

Mr. Eastman. In the first place 1 state what is necessary to 
be done. Another thing is to reduce the interest ou money to its 
minimum or to annihilate interest entirely. Another thing (but it 
does not touch this country iu a very important manner now) is 
the land question ; that is a very important question in England, 
but not perhaps in this country. * These three questions, if properly 
understood, could be easily arranged so that we would have no fluctua- 
tion whatever. We would have no man rich and no man poor. No 
man could get rich off another man's labor, but only off his own, and 
that would be an impossibility. The cause of all fluctuations is the 
result of a surplus of labor on the market. When society has more 
labor to perform, we do not increase the number of hours, but we in- 
crease the number of men, and when society has less labor to perform, 
we do not decrease the number of hours but we decrease the number of 
men. For instance, whenever a war occurs, there is a large increase in 
the amount of labor to be performed. We produced as much in this 
country and we lived as well during the war, working ten hours a day, 
as we did previously to the war or since. If a war increases the amount 
of labor to be performed, it must necessarily increase the demand for 



DEPRESSION IN LABOR AND BUSINESS. 49 

men. If it increases the demand for men it increases the rate of wages, 
and an increase of the rate of wages must necessarily depreciate the 
purchasing power of money. Now, when the war ends, if men work the 
same number of hours, it must take less men to do the work, and must 
thus throw a surplus of men upon the market, and this will cut wages 
down until the market readjusts itself again. The number of our busi- 
ness men has increased two or three fold within the last few years. 
One business man now can do as much business as two or three men are 
engaged in doing. That is so much waste labor. The amount of labor 
that is out on tramp is also so much waste labor. The amount of labor 
used in producing the precious metals for money purposes is also waste 
labor. The amount of labor that is performed on farms without agricul- 
tural machinery is also practically waste labor. There is just as much 
waste labor in the country to-day as there was during the war. It is 
not that there is a greater volume of business done, but that the labor 
market has relieved itself from its surplus. 

Mr. Dickey. Do you mean that it has crowded out the drones? 

Mr. Eastman. Not necessarily so, but it has crowded out men who 
cannot get employment, aud has sent them into other business. * When 
they tried to cut my wages down I would not stand it, and I went into 
business. So do other men. The consequence is, that the number of con- 
tractors in this city is three or four times as great, in proportion to the 
population, as it was ten years ago. Men are performing a lot of useless 
waste labor, but the labor market has relieved itself. Consequently, the 
rate of wages goes up. This is the cause of fluctuations. Money is simply 
a measure of labor, just as we have a rule to measure length, and a scale 
to measure weight. The labor market in this country has thrown off its 
surplus in the way 1 have mentioned. I kuow six men who are now work- 
ing in Europe who used to work for me. Our exports commenced to in- 
crease as the rate of wages here began to fall, and our imports commenced 
to decrease as the rate of wages in Europe was ascending. Previous to the 
panic we imported very largely. Before every panic imports are very 
large. They almost doubled in the year or two before the panic. Dur- 
ing our depression here they have inflation in Europe. This labor mar- 
ket will go swinging back aud forward like the wheel of a wagon that 
has too much play. It will be always so until we adjust the hours of 
labor so that every man can find employment whenever he wants it. 
We do not need to regulate individuals, only to establish the custom, 
leaving the individual free to act as he sees fit — free to work one hour a 
day, or sixteen hours a day, or twenty hours a day. 

Mr. Dickey. Taking this country at large, cannot men work for any 
length of time they choose ? Can they not be employed by the day, by 
the week, or by the month % 

Mr. Eastman. Yes. 

Mr. Dickey. There is nothing to compel them to work any given num- 
ber of hours a day ? 

Mr. Eastman. Yes; there is the custom of working so many hours a 
day. Society is divided into employer and employed, and the system 
controls the individual men. If you were to control the custom, every 
man could work as he pleased, but now a man cannot do that, because 
there is always a surplus of men on the market. 

Mr. Dickey. The reason that you assign for the great depression in 
the labor of the country is that the labor system is not adjusted ? 

Mr. Eastman. I say that society, as a rule, works the same number 
of hours continuously. 
H. Mis. 5 4 



50 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Dickey. And you attribute all the depression of labor to that one 
thing? 

Mr. Eastman. Yes. 

Mr. Dickey. Because the number of hours that a man should labor is 
not properly regulated ? 

Mr. Eastman. Yes, as a custom. 

Mr. Dickey. How would you remedy that ? 

Mr. Eastman. By a labor congress. If all the wage workers of the 
country were in trade unions, they would send delegates to a labor con- 
gress, and all the employers of labor would send delegates, and this con- 
gress would agree to reduce the hours of labor in a graduated way (say 
fifteen minutes a day for the first month, and so on), until there would 
be no surplus labor on the market. 

Mr. Dickey. Do you think that if eight hours was the custom in this 
country, universally respected and regarded by all employers, all the 
laboring men in the country would be employed to-day 1 

Mr. Eastman. I do not think that a reduction to eight hours would 
be enough. 

Mr. Dickey. What would you make it? 

Mr. Eastman. I would not care whether the time was one hour, two 
hours, or twenty hours, but I would reduce the working time until 
everybody could find employment. You could not reduce it below the 
demand. 

Mr. Dickey. Then you would pay a da\'s work for three hours' work, 
if it were necessary, in order to employ men ? 

Mr. Eastman. The rate of wages which men get in money amounts to 
nothing at all. The value of money is determined by the rate of wages. 
Labor is what gives value to everything. The amount of labor expended 
in the production of any commodity is what determines its value. That 
is one fundamental law in political economy. Another is that the rate 
of wages determines the purchasing power of money. On these two laws 
political economy rests. 

Mr. Dickey. Then you would not have any legislation on the subject 
of labor by the legislative authorities of either State or Federal govern- 
ment, but by an independent labor congress, representing the labor ele- 
ments of the country ? 

Mr. Eastman. That would be my opinion. 

Mr. Dickey. You would not ask any legislation by Congress or by 
the States? 

Mr. Eastman. It strikes me that such legislation would be impracti- 
cable. 

Adjourned till 10 o'clock to morrow morning. 



Chicago, III., July 29, 1879. 
Views of Mr. Jonathan Y. Scammon. 

Mr. Jonathan Y. Scammon came before the committee, and, in re- 
sponse to preliminary questions, stated that he had resided in Chicago 
about 44 years; that he is by profession a lawyer, but that his business 
for the last twenty or twenty-ive years has been mainly banking, and 
the building up and developing of the town. He said : Before the great 
fire of 1837, I was one of the largest owners of buildings in the city, and 
I have had for a good many years a great number of buildings here, and 



DEPRESSION IN LABOR AND BUSINESS. 51 

I have been familiar with the business and development of the city and 
of the country generally. Mr. Ogden and myself commenced the build- 
ing of the first railroad from this city, and E was at one time the largest 
stockholder in it. 1 have been always actively engaged in matters con- 
nected with the business and development of Chicago and of the North- 
west, until since the great fire of 1871, and the panic of 1873, and the 
subsequent fires (as we have had eight of them within the last six 
years). 

The Chairman. What is your occupation now ? 

Mr. Scammon. I am looking after the remains of my property, and 
am practicing law in a small way. 

The Chairman. Give us a general idea with regard to the depression 
in this city since 1873, if there has been any. 

Mr. Scammon. There has been almost a universal depression here 
since 1873. In my judgment it commenced in 1872. We had the pre- 
monitory symptoms of it then, but in consequence of the deposit of 
money which the government made with the banks of New York in the 
fall of 1872, we were enabled to bridge over the chasm until 1873. The 
nature of the business and transactions of the Northwest is this: the 
great demand for money here is to move the crops. We want all the 
money we can get generally in the fall of the year to forward the cereals 
and to purchase the hogs and beeves, and to pack them. And after the 
crops have been moved this money all runs down again to the great 
centres — to New York, as the great commercial centre of the country. 
Money has been generally abundant here after the crops have been 
moved. I was president of a bank that was doing the largest business 
here — the old Marine Bank — for a great many years, and that was 
always the history of its business. After the crops were moved money 
always became abundant, and it was sent to New York. It remained 
.abundant until we wanted it again in the fall of the year to purchase 
the crops. Tne banks in the Northwest always relied upon their corre- 
spondents in the east for the large accommodations that were necessary 
to help to move the crops in the fall. In 1872, for the first time after 
the commencement of the war, when money was needed to move the 
crops, the New York banks could not send us the money that belonged 
to us, and hence came the depression in the fall of 1872, which was re- 
lieved, as we all know, by the deposit of $5,000,000 by the government 
with the banks in New York. That enabled us to move the crops for 
that year, and to bridge over the catastrophe for that year. When the 
next fall came, the business and the population of the country had in- 
creased, and the demand for money had also augmented. The money 
which had been circulating in the West had returned to New York. 
The deposit of the $5,000,000 made by the government had been paid 
back, and the government was not disposed to make any further deposit. 
The banks of New York had been relieved, and they were in no such 
imminent danger as to cause them to call on the government for help. On 
the contrary, as I read the signs of the times, the banks of New York 
thought that it was for their interest to allow this scarcity of money. But 
at all events, when we -demanded the money to be returned to the North- 
west, as it had always been heretofore, and advances made to enable us 
to move the crops, all the banks of the country, with very few excep- 
tions, were broken. That was in the fall of 1873. The banks did not 
merely suspend ; they were all broken, except the banks in Chicago, and 
the only reason why the banks in Chicago did not suspend, like all the 
other banks in the country, was because we had " corn in Egypt." Peo- 
ple had to come here for their corn, and they brought sufficient money 



52 DEPRESSION IN LABOR AND BUSINESS. 

here, so that the only large city in the Union whose banks did not sus- 
pend at that time was Chicago — because this issuing of clearinghouse 
certificates was a mere banker's trick to cover up what was the manifest 
fact, that the banks had not any money, and so they supported each 
other's credit in the clearing-house. For instance, a bank in this city 
had $500,000 with one of the largest banks in New York. The Chicago 
bank demanded of the New York bank that it. should send on that 
money ; the New York bank wrote that it could not do it; that it had 
not the money, but that it would pay the drafts of the Chicago bauk. 
This paying of the drafts of the Chicago bank, however, would not en- 
able it to pay off its corresponding country banks, and would not enable 
the country banks to advance the usual money to their customersto move 
the crops. This large bank suspended and remained suspended until it 
had time to pay off its customers out of its bills receivable, and then it 
resumed. 

Now, in my judgment, there was only one immediate occasion for the 
troubles in 1872, and for the troubles in 1873, and that was a want of an 
adequate amount of currency to do the business of the country. It has 
been said that we have been going too fast; that everybody had become 
extravagant. "Whether that be so or not, the habits ot the people and 
the business of the country, and the rights of the debtor and of the 
creditor, had been based upon the voiume of currency as it then existed, 
and it was disastrous to the debtor class to diminish the volume of cur- 
rency — or not to increase the volume of currency in proportion to the 
business and population of the country — just as it would have been to 
the creditor class if the volume of the currency had been increased so as 
to make the purchasing value of a dollar much less. My opinion was 
then, and is now, that the general disaster of 1873 came from the re- 
fusal or the neglect of the government to make the volume of cuVrency 
commensurate with the business and the wants of the people. The 
panic of 1873 threw out of adequate employment from one-fourth to 
one third of all the laboring people in this section of the country. It 
stopped so many of the industrial establishments in the Northwest and 
of the country generally that one-fourth or one-third of the men em- 
ployed in them (and through them many others) were thrown out of 
employment ; and from that time on, until last fail, a large portion of the 
community has been living not upon its earnings but upon the remnants 
which it had on hand. It was very much the same state of things that 
we had here in 1837. The history of things for the last five years seems 
identical with the history of things from 1837 to 1842, only with this 
difference: that in 1837 we were a new community here, and the money 
which we had, not having any security behind it, was lost. We not 
only lost the money that we had in the banks, but we lost the money 
that we had in our pockets, because it was not good tor anything. 
Everybody failed. I was then a lawyer here doing the largest collection 
business in the city. I sued everybody and got judgment against every- 
body, but there was at that time no creditors' bill or bill of discovery, 
and, before I could get my executions out and could have them levied 
on the property of debtors, the debtors put their property out of their 
hands, either by making assignments to friends or by sales to friends. 
There were hard times from 1837 to 1840, or until they had an oppor- 
tunity of getting clear under the bankrupt law of 1841.* They ate up 
everything they had, so that when the bankrupt law of 1841 passed, 
and when peopie applied for its benefits in 1842, they had not anything 
left. The majority of those who took advantage of the bankrupt law 
had not enough to pay the fees of the court. The state of things here 



DEPRESSION IN LABOR AND BUSINESS. 53 

generally from 1873 to the fall of 1878 has been very similar to the state 
of things at that time, only with this difference: A certain class of peo- 
ple has been saying that during all this time money has been very 
plenty; some bankers tell yon (and they did tell you in 1874 here) that 
money was never so plenty. One large banker here said to me a year or 
two ago, <■ Mr. Scaminon, the fault is not, as you think, that then 1 is not 
money enough, but that there is too much money. I will lend you money 
cheaper now than you ever borrowed it in your life; of course, I 
waut you to give a good cash collateral for it, so that if you do not 
pay your note when it is due we can collect it."' I said, "Mr. presi- 
dent, what collaterals do you give for the money which you borrow?" 
"O," said he " we do not borrow any money." " Why," said T, " I learn 
from your last report that your bank had a capital of a million of dollars, 
and that it had five millions on deposit. That tive millions of deposits 
the bank borrowed." Said he, "We do not call that borrowing money." 
Said I, U I do; and the difference between my borrowing money from 
you and your borrowing money from your customers is, that 1 pay you 
interest for the money L borrow and give security for it, whereas when 
you borrow money from your customers you pay no interest and give no 
security. Now," said I, " I do not think that that is exactly the fair thing. 
If I have got good cash collaterals I will not deposit them with you ; I will 
sell them if I want money." Said I, " You are entirely mistaken about 
the business of banks. A bank does not do business on its own capital, 
but on the capital of depositors. It is merely a pool for collecting the 
money of the community together and distributing it again for the benefit 
of the people. Now, whatever security you require of the people you 
should give to the people." I said that I was the oldest banker in the 
city, that I had done a large amount of banking business, and that I con- 
sidered it legitimate banking for a bank to make use of its capital in 
supporting the ability, credit, responsibility, and integrity of the busi- 
ness men of the community, and that the business men of the commu- 
nity give the bank the same security in their integrity and ability that 
the bank gives to its customers. I said that the trouble in 1873 came 
not from overproduction; that there was no such thing as overproduc- 
tion, and that there never could be overproduction in any community. 
There is no such thing possible as overproduction in anything that goes 
to promote the comfort and convenience of civilized life, provided that 
the power of distribution keep up with the power of production. 
Everybody who has lived in this community as long a time as I 
have, knows that iu 1835 the number of families who spent five 
or six hundred dollars a year in their support was very few indeed. 
Men who now live in this city at an expense of from ten to twenty-five 
thousand dollars a year, then lived at an expense of from tive to six and 
eight hundred dollars a year, and they lived then, as they thought, very 
comfortably. They certainly lived a great deal more comfortably than 
they have lived since 1873. With the growth and development of the 
country and with the advauce in civilization our wants have increased, 
and everybody requires a great deal more mouey and a great deal more 
conveniences than they did then. Up to 1872, the quantity of money 
afloat was adequate to do the business of the country. In my opinion, 
notwithstanding everything that has been said about a depreciated cur- 
rency, this country never was so prosperous as from 1865 to I860. Then 
any man who had any good property could sell it at once for mouey or 
for that which he could readily convert into money. The whole property 
of the country had become liquid. Money had no advantage then over 
any other kind of property. But now the value of money has been so 



54 DEPRESSION IN LABOR AND BUSINESS. 

increased proportionately over other property tbat, substantially, the 
real estate in and about Chicago (with the exception of favorite pieces 
of property) has become like original sin, the more of it a fellow has the 
worse off he is. Everybody who had any real estate here before the 
great fire, and before the panic of 1873, has been (with very few excep- 
tions) made poor, aud the majority of the people in this county has not 
been able to pay its taxes. The lots of property that have been adver- 
tized for non-payment of taxes and that have been sold for taxes with- 
in the last three or four years have been vastly larger, in proportion to 
the population and the business, than even in the period from 1837 to 
1842. The list has been so large that its publication, I believe, has cost 
trom $50,000 to $80,000. A large proportion of the property has been, 
under a general law of this State, forfeited to the State for non-payment 
of taxes. The consequence has been^that, with the exception of favorite 
pieces of real estate (for instance, on such a street as Madison street, or 
State street or other favorite streets), a great deal of the real estate of 
the city has been forfeited to the State of Illinois. We have a law 
here that where a man cannot pay his taxes, and where nobody else will 
buy the property at tax sales, the property shall be forfeited to the State. 
Then it is put into the tax levy of the next year with ten per cent, ad- 
ded, and is so continued from year to year, the owner having a right 
to redeem it on paying ten per cent, per annum. 

Mr. O'Connor. Within what time has the owner a right to re- 
deem it? 

Mr. Scammon. There is no limit to the time when the property is for- 
feited to the State, but when it is purchased by another party it is to be 
redeemed within two years, and the purchaser gets fifty per cent, per 
annum. So little has been the confidence of the people in real estate 
and in their ability to carry this property, that the number of buyers at 
tax sales has been comparatively very small. I live seven miles from 
here, in the town of Hyde Park, which is the suburb of Chicago, aud is 
in fact a part of the city of Chicago. You cannot tell where Chicago 
ends and Hyde Park begins any more than you can tell where Hamburg 
ends and Altoona begins. It is merely an artificial line, Hyde Park 
was a very flourishing town, aud property there was in demand. A 
great many of our best citizens live there. But since the panic real es- 
tate there can hardly be given away, and a large majority of the owners 
of property there cannot pay the taxes on their property. The moment 
that all these manufacturing establishments were closed up, and the 
moment that great houses failed and that receivers were appointed to 
manage the escates, an artificial plethora of money was created in the 
banks. These receivers and assignees collected money from everybody 
and paid none of it out. The money went into the banks, and, there- 
fore, the banks said that.money was never so plenty, and they were 
ready to loan it out at a very low T rate. This continued from 1873 
until three years since, when these corporations and firms, and their 
assignees in bankruptcy, and their receivers, btgan to distribute among 
the creditors of these concerns the proceeds of their sales ; and then a 
large number of the banks failed. Half a dozen or more of the banks 
and banking institutions here "went up" the moment that this distri- 
bution commenced. But in the mean time the gentlemen connected 
with banking institutions would say, u It cannot be that there is a lack 
of money capital, because we have all got more money than we can 
loan on adequate security." I said to Mr. Saul Smith, the president of 
one of our large banks, that I had been inquiring and had found that 
there was no money in the community except what was in the banks, 



DEPRESSION IN LABOR AND BUSINESS. 55 

and that the money there did not belong to the banks, but belonged to 
their creditors, and that was the case between 1873 and 1876-77. My 
opinion is that the force of a panic expends itself within live years. It 
expended itself last year, 1878, just as it expended itself after 1837 in 
1842, and my opinion is that since last fall there has been an improve- 
ment. But it has been an improvement confined mainly to a new class 
of people. Tlie men who built Chicago, the men who developed this 
country, the men who rebuilt Chicago after the fire, have generally 
"gone up." Large sums of money were loaned to rebuild the city, and 
none of these loans were made except on a basis where the property was 
supposed to be at least worth twice as much. fThe city was mainly built - 
up in 1872 and the early part of 1873. NowHhat property, generally, 
could not bf 1 old to day for the mouey that has been expended in the 
buildings. As an illustration, there is a piece of land here at the corner 
of Mich" ,n avenue and Kandolph street which never rented for less 
than $31;, 000 a year for a great many years before the fire. That prop- 
erty was burned over, and the proprietor wanted to borrow money to 
rebuild. It was said that it would take $125,000 to rebuild. The in- 
surance company had the laud appraised, and it was valued at about 
$175,000 or $200,000. The company loaned $125,000 on it and the 
building was put up. But such has been the depression here that 
the building did not find a tenant until the last year or two, 
and the mortgage was foreclosed. The insurance company would not bid 
upon the property the aojount of money loaned on it, so that that prop- 
erty which the insurance company and its agents here valued (and they 
did not overvalue it) at $300,000, including -the $125,000 given to put 
up the building) has been sold for less than $125,000; and I believe that, 
after expending $10,000 or $15,000 in repairs and alterations, they only 
get some $9,000 or $10,000 rent for it. "> That property is intrinsically 
as valuable as it ever was. The city of uhicago has a larger population 
than it ever had before. The aggregate amount of business of Chicago 
is larger than it ever was before. And yet, so far as the majority of the 
people who rebuilt Chicago are concerned, and so far as the business 
people of Chicago ars concerned, this is a time of great depression. There 
are certain great establish ments — very large grocery houses, for instance — 
that stood the storm and have been able comparatively to monopolize 
business. The owners of these establishments will tell you that business 
is good. There are large banks connected with stock-yards, and with 
monopolies in transportation of cattle, &c, that are making a great deal 
of money ; and there have been so many banks weeded out that the banks 
that are left have a very good chance to make money, so that it would 
probably be the opinion of these bankers that the times are good. The 
people connected with the stock-yard business generally, during all this 
time of great depression, when in money centres money was very 
scarce, when pork was very low, and the feed of cattle very low, have 
been making and coining money; and if you go into the town of Hyde 
Park or ride down Prairie avenue, you will see splendid palaces which 
the hogs have built. The stock-yard business has been a very prosper- 
ous business; and you will find banks and bankers connected with the 
stock-yards who will tell you that business never was so good. That is 
true so far as they are concerned ; but where there is any prosperity in 
Chicago it is exceptional. In my opinion there is but one remedy 
for all this, and that is the remedy which has been always adopted iu^ 
this country after a great panic. Great panics have always been 
caused in this country (with few exceptions) by the want of an ade- I 
quate amount of currency to distribute the products of the couutry ; and, 



56 DEPRESSION IN LABOR AND BUSINESS. 

before general prosperity has been ever restored, the amount of currency 
has always had to be increased. It was so after the war of 1812, when, 
the United States Bank was created, and when it set afloat a great deal 
of good money. It was so after 1837. Here in this Northwestern coun- 
try, where we were so Democratic that we would not allow any banks, 
the new Northwestern States generally, being averse to any kind of 
paper currency on account of the great losses from the panic of 1837, 
provided either absolutely against any bank of issue, or provided only 
lor a State bank. In this State the State Bank had to be wound 
up by the legislature; but there was a Mr. George Smith, a crafty 
Scotchman, who lived here, and who got the charter of the Wis- 
consin Marine and Fire-Insurance Company, in which charter was a 
power to receive money on deposit and to loan the same. On the pre- 
tense that this gave him power to issue currency, he issued certificates of 
deposit, and from 1841-'42 to 1852-'53 he made use of them when there 
was a great want of circulating medium here. He issued certificates of 
deposit, and the business of all this Northwestern country was done sub- 
stantially with George Smith's money and through kindred institutions. 
He acknowledged to me that he issued a million and a half of them. 
They were in this form : "John Smith has deposited with the Wiscon- 
sin Marine and Fire-insurance Company one dollar, payable to him or 
order on the return of this certificated There was an immense num- 
ber of smaller like institutions all over the country, which furnished the 
circulating medium. And it has been the opinion of all business men 
here that this country is twenty years ahead of what it would have been 
if it had not had that circulation. It has been their opinion that this 
was the means of lifting us- up out of the depression from 1837 to 1842. 
Then Mr. Smith withdrew his currency and left the country. That is 
the only instance I ever knew of a great community being greatly ben- 
efited by an illegal currency and of an immense fortune being made by 
a man from the issuing of that currency. Probably the experiment 
could not be repeated. I have cited this thing as an illustration of my 
opinion. I have been a very large business man here, I have loaned a 
great many millions of dollars, and have expended many hundreds of 
thousands of dollars, perhaps millions (certainly more than one million), 
in building up this town. I expended here, after the great fire, from 
half a million to a million of dollars in building, and I have been familiar 
with the business of the city, perhaps as familiar as any other gentleman 
since I have been here, and I am convinced that this depression came 
from a scarcity of circulating medium. That scarcity of circulating me- 
dium destroyed all confidence in individual ability, and the banks, from 
that time to this (with few exceptions) have been mere pawn broking 
shops. They have not loaned money, as I used to loan money, to busi- 
ness men on their business character and ability, just as money is depos- 
ited with them from confidence in their ability and integrity. 

Mr. Martin. Cannot people borrow money now from the banks with- 
out depositing collaterals'? 

Mr. Scammon.' If so, it is an exception. That is not the rule, and 
has not been the rule. In old times we used to think it very good secur- 
ity if a man was a good business man, and if he came in and wanted to 
borrow money and gave us his own note. Ir he was worth $10,000 and 
wanted to borrow one or two thousand dollars, or even $5,000, we thought 
his own note good security. 

Mr. Martin. Cannot that be done now? 

Mr. Scammon. Very rarely. As they say in Pinafore, "Never, or 



DEPRESSION IN LABOR AND BUSINESS. 57 

hardly ever." There are some few gentlemen who can borrow money in 
that way, but they are the exception. 

Mr. Cowg-ill. Would it be a safe kind of banking business, as a gen- 
eral thing, to loan money without security 1 ? 

Mr. Scammon. I think it is just as safe a banking busiuess to loan 
money to a good customer without security as it is a safe mercantile 
business to sell a man a stock of goods without security. 

Mr. Sherwin. The difference is this, however. The banker is a trus- 
tee for other people's funds, while the merchant sells his own goods and 
takes his chance. The two cases are different. 

Mr. Scammon. I reckon that the two cases are the same thing. The 
merchant generally is the trustee for his creditors. He has purchased 
his goods to sell, and to recoup his creditors. 

Mr. Sherwin. That is, assuming that he buys on credit himself? 

Mr. Scammon. I guess that that is the case generally. If you average 
any community you will flud that they have not a great deal after their 
debts are paid. 

Mr. Sherwin. You do not mean to say that you, as a bauker, would 
deal with the same freedom in making loans as you would if you were 
in the grocery business on your own account % 

Mr. Scammon. I certainly would and did so, and I always made money 
at it. 

Mr. Cowgill. Would you, as a business man, be willing to make your 
deposits at a bank which was in the habit of loaning money over the 
counter to its customers without security % 

Mr. Scammon. Certainly not without security ; buc the character, the 
credit, the business abilities of a merchant or of a business man in a 
good position, are the best of all possible security. I would not loan 
money on collaterals to any man in whom I had not confidence. I would 
not do any business with any man in whom I had not confidence. Saul 
Smith has been the most successful banker that we ever had here, and 
he never hesitated to loan money to individuals on their personal secu- 
rity. The majority of loans that I have ever made I have made without 
any other security than the knowledge of the ability, good character, 
and credit of the customer, and I have rarely lost any money in that 
way. Whenever I have lost money it has been when I loaned it to some 
man who was not very good in himself, but because he gave me some col- 
lateral ; and I was very apt to be caught with the collaterals. A banker 
is nothing but a merchant. A firm of the greatest bankers in England 
(Baring Brothers) calls themselves merely merchants, and has loaned 
, money all over the world on mere personal security. Of course they 
loan on collaterals, too, but they advance money on personal security. 

My opiuion is that we are on the eve of returning prosperity, but that, 
just as soon as the men who have been thrown out of employment have 
adequate employment and as soon as the general industry of the coun- 
try is restored, we will have another panic, unless the volume of the cur- 
rency is increased so as to make it commensurate with the business and 
population of the country. In my opinion you cannot regard a country 
otherwise than as a man. Every country and every community is as a 
man. In order that a man shall be healthy and shall be able to do his 
duty he must have an abundance of good food, which makes an abun- 
dance of arterial blood, and the quantity of arterial blood in his veins 
must be commensurate to the size of the man and to the work that 
he has to do. So iu a country. The volume of the currency that you 
have in any country must always be commensurate with the life, activ- 
ity, and business of the country. 



58 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Dickey. How much volume of currency ought we to have in this 
country now! 

Mr. Scammon. I presume that the Lord knows that, but I do not. 

Mr. Dickey. I want your opinion about it. 

Mr. Scammon. My opinion about it is just this, that there is a law of 
demand and supply which would regulate it. I know, as a matter of 
fact, that before the war we never had any actual limit on the bank cur- 
rency. The banks generally could not issue as much money as they 
were authorized to issue. I do not believe that there should be any limit 
at all to the volume of currency except that of demand and supply. I 
believe that if any country makes money, or anything else, a measure of 
other values, it is bound to make it so abundant as not to give one spe- 
cies of property an advantage over another. The old law of the State 
of Maine and of the State of Massachusetts did not allow real estate to 
be sold on execution. Why? Because real estate possesses no value 
except a man wants it ; but personal property could be sold on execu- 
tion, because personal property being transportable, it was to be pre- 
sumed that it would have a substantial value everywhere. If I owed 
you a debt of $600, and you got a judgment against me, and if I owned 
160 acres of land worth $10 an acre, you were not obliged to take that 
land on execution ; but if you did take it you must take it at its fair value. 
The sheriff made an execution on the land and appointed three ap- 
praisers to say how much of that laud was equal to the debt, and they 
set off 40 or 60 or 100 acres of it, and the debtor made a deed of that 
quantity to the creditor, and that was the end of it. That was the old 
law of Maine and Massachusetts. It was the law of Maine when I came 
from there 44 years ago. That was carrying out fair dealing; it was a 
law to the debtor and a law to the creditor. If there was no law here 
now making anything a legal tender for the payment of debt, then this 
insurance company that loaned $125,000 on the piece of property that 
I have mentioned, if it got a judgment against the land and against the 
property, would have to get an appraiser to say how much of the prop- 
erty was equivalent to the debt. But, to make the thing fair, there 
should be a further appraisement. What that man borrowed to put up 
that building with was the building itself. The money was merely the 
means by which it was done. Now, that building to-day could be put 
up for $60,000. If the man who borrowed that money pays the insur- 
ance company $60,000, he pays to it all that in equity he got from it. 
He borrowed the building; that is all. Creditors can understand very 
clearly how uujust it would be to increase the volume of currency so 
that $l:i5,000 would not build more than half the building; but they seem 
unable to see that if the government reduces the volume of circulation 
so that $60,000 is worth, when the debt becomes due, what the $125,000 
was worth when the money was loaned, the debtor is swindled. My 
opinion is, that the whole legislation of the country, the whole public 
opinion of the country, the whole press of the country, has been on the 
wrong tack for the last 25 years. Here in the Northwest we have been 
so anxious to have the country developed and improved, that we have 
merely said to the parties who had the money, " Give us the money on 
your own terms. 7 ' 

Mr. Dickey. Have you any opinion about what the volume of cur- 
rency ought to be for the business interests of the country % 

Mr. Scammon. I have this opinion : General Grant sent a message to 
Congress in 1873, and I have never seen any answer to that message 
from anybody, either from his own friends (of whom I am one) or from 
anybody else. He showed in that message that we had less currency 



DEPRESSION IN LABOR AND BUSINESS. 59 

in this country, per capita, than existed in any other commercial country 
in the world. I am of opinion that the American people are more intel- 
ligent than any other people in the world, and that they require more 
money than any other people in the world. And I have this further 
opinion, that in all commercial countries business has got to be done on 
credit. In a barbarous and uncivilized country business is done entirely 
on a metallic standard. Their money must be soinethiug that cannot be 
burned up, that cannot be destroyed, that may be hid or buried. But 
just in the degree that countries become civilized and Christianized 
their business is done on trust in their fellow-men; and that trust in 
good men is the best security in the world. It is the only security of 
governments. In every commercial country business is done on trust, 
the^security being either in the shape of bonds, promissory notes, bills 
of exchange, bank notes, or government paper. My opinion is that the 
business of this country will be always doue on trust, and mainly on 
paper. ,If it is done, however, on individual paper and on individual 
trust, we should have the banks as heretofore. If money is made so 
abundant that the whole property of the country is made liquid and 
flexible so that any man can at pleasure change his property into cur- 
rency, then the business of the country will be done for ready pay ; 
and if you want the business of the country done for ready pay, the 
volume of currency has got to be vastly larger than anybody has an- 
ticipated. 

Mr. Sherwin. The money of the country, you say, has got to be 
liquid. 

Mr. Scammon. Yes, I believe it would be a very excellent thing if the 
Government of the United States would pass a very simple law, mak- 
ing all the paper which it issues receivable at all times at the Treasury, 
and redeemable either in coin or in interconvertible bonds equal to coin, 
those bonds to be reconverted into currency at any time that the cur- 
rency is needed, with this provision that the government may call in and 
pay off in coin, whenever ic pleases, all of its indebtedness. If that were 
done, I think we should be able to say, as Mr. John Sherman says about 
what has happened since resumption, that there has been no demand 
for coin. I believe that there would be no demand for coin then, and 
that the government indebtedness would be in a few years gradually 
wiped out. 

Mr. Cowgill. Would there not be a large demand for coin, if you so 
diluted the currency as to have a liquid currency in this couutry, so 
that everybody could have his hands and pocket and hat full of it*? 

Mr. Scammon. I did not say that everybody could have his hands 
and pocket and hat full of currency. I understand money to be a purely 
artificial thing. It is like the blood in the veins of a man. I under- 
stand that money is made for the purpose of exchange, ami I hold fur- 
ther that the old doctrine was correct that interest for the use of money 
cannot be justified. The law of demand and supply should regulate the 
matter. The moment you add so much currency that the interest on 
money would be less than the gain on other good property men would 
convert their money into other good property, and instead of people 
wanting to hoard money as they do now, they would want to get rid 
of it by putting it in other good property. I do not propose to give 
you or myself or anybody else money without getting something for it. 

Before the fire I had a rent roll of from $70,000 to $100,000, and I do 
not see why that property was not just as good a security to the gov- 
ernment, and through the government to the whole people, as a govern- 
ment bond is. What is the money that we now have ? It is nothiug else 



60 DEPRESSION IN L4BOR AND BUSINESS. 

than the faith of the government. We have no other money than gov- 
ernment money. The ouly difference between national-bank notes and 
legal-tender notes is that the one is the direct promise of the govern- 
ment to pay the amount, or to receive the note in payment of dues to 
the government, while the other is a promise on the part of the banks 
to pay legal-tender for the note. There is one other difference, and that 
is that we pay the national banks for the privilege of issuing notes in 
their name. 

Mr. Cowgill. I understood you to say a moment ago that you did 
not want any more money than was necessary to meet the monetary de- 
mands of the country. Am I right about that? 

Mr. Scammon. Yes, sir. 

Mr. Cowoill. If there is a demand for more money here, why is it that 
the national banks do not supply the vacuum ? There are no restric- 
tions, as I understand the law, in regard to banking, and, therefore, why 
do not the national banks supply this demand which you say exists? 

Mr. Scammon. Just for the same reason that the Frenchman gave 
when he went into a bank to draw the money which he had there. He 
said, "If you have got the money I don't want him, but if you have not 
got him, I must and will have him." The reason is that the men who N 
want the money have their property in such shape that the banks will 
not loan upon it. I am not in favor of increasing the volume of cur- 
rency to be borrowed. We borrow too much money now. But I want 
the government to issue all the money, and to make that volume of cur- 
rency large enough to represent all the property of the country, so that 
property in money will not have any advantage over any other prop- 
erty. 

Mr. Cowgill. How would you have the government diffuse this 
money among the people? I understand you to say that you are not 
in favor of men getting money for nothing. Now, how will the govern- 
ment distribute this money so as to get it out into circulation among the 
people ? 

Mr. Scammon. When we built the Illinois Central Railroad and the 
Galena road, whenever we bought land and paid for railroad ties and 
labor, the money went to the people and the people paid it to one an- 
other. If the Government of the United States would pay out its own 
mon^y for everything, that money would go into circulation, and we 
should get as much of it as we needed. My own opinion is that Divine 
Providence is a great deal wiser than you or I or any other man, and 
that if we do not learn wisdom from the disasters that we have passed 
through, we shall make a very great mistake. Before 1837, such a thing 
as a government currency, or as a currency secured on government bonds 
in the hands of the people, never was heard of; but out of the disaster of 
1837 we got the free-banking law of New York, which was the begin- 
ning of the national banking system, giving security to the people. And 
out of the disasters of the war we have got a uniform, secured, currency 
all over the country in which everybody has confidence. I believe in 
the government of Divine Providence. I do not believe very much in 
the wisdom of Congress, or of Congressional committees, or of bankers 
that profess to know a great deal more than we do. I do uot want a man 
who puts his property in money, and who sits down and does his busi- 
ness by cutting off coupons, to have any advantage over me who have 
lived here 40 years, and who have spent my time and wealth in the 
building of railroads and houses, and in developing and enriching the 
country. But for this contraction of the currency I to-day should be 
worth a million or a million and a half of dollars. After the great fire 



DEPRESSION IN LABOR AND BUSINESS. 61 

of 1871, when my neighbors were jumping into the lake, or taking poison, 
or cutting their throats, aud when they thought that everything had 
goue up, I had some faith in the future of Chicago, and I went to work 
to rebuild the town. If the panic had not come, my property would 
have been worth just as much to-day as it was after I got up the first 
building in 1872. But the panic came, and through the panic a con- 
traction of the currency, so that my property has not only been reduced 
one-halt in value, but the real- mercantile value of the rest of it has 
been diminished one-third, because while we are on the down-hill grade 
nobody wants to buy property at any price. It is not salable. The in- 
trinsic value of property about Chicago must be greater now than it 
ever was before, because the population and busiuess of Chicago are 
greater, but yet property has depreciated. 

The Chaerman. What is the condition of labor in this city as com- 
pared to what it was ten years ago % 

Mr. Scammon. Labor was employed and was fully remunerated until 
the disaster of 1873. We paid generally in 1873 from $1.50 to 81.75 a 
day for labor, but the panic gradually affected labor until now we get 
labor at $1.25 a day, and can get a vast deal more of it than we can 
employ. Labor has not full employment, but it has been improving ; it 
is like the going in and out of the tide. Last fall I could see that the 
running out had ceased, and that the tide had commenced to return ; I 
think there has been as manifest an improvement between the fall of 
1878 and the present time, as there was between the fall of 1812 and 
the summer of 1843. But it has been slow; public confidence is no': 
restored ; the banks still are pawnbrokers' shops and not banks. 

The Chairman. Then the condition of labor is not healthy here so 
far as employment is concerned % 

Mr. Scammon. No, sir. 

The Chairman. Has it been during the last seven years % 

Mr. Scammon. It was in a very healthy condition down to 1873. I 
was out of this country from 1857 to 1860, and cannot speak of it dur- 
ing that period. But from 186 L down to 1873, labor was fully employed, 
and at remunerative prices. 

The Chairman. What remed3 r have you to suggest in order to im- 
prove the condition of labor ? 

Mr. Scammon. My opinion is, that there has never been but one way 
of getting out of this depression, and that is by increasing the volume 
of currency; that has always been so; the whole country is just in the 
same condition that General Banks was in on the Red River. All the 
wise men of his staff said that all he had to do was to blow up his boats 
and abandon them ; but one of the wise men, a lumberman from Maine 
who had been accustomed to drive logs down the streams of Maine, 
said that the only way was to raise the volume of water, and if the 
water did not come down from Heaven, to build some kind of a dam to 
raise it. So this lumberman took hold and made his dams and raised 
tho volume of water and Banks got his vessels out. Just so the vol- 
ume of currency has got to be increased before we can obtain prosperity. 

Mr. Dickey. Calling the present volume of currency in the country 
$700,000,000, in your opinion, is that amount sufficient for the business 
aud labor interests of the country ? 

Mr. Scammon. I do not thiuk-it is. 

Mr. Dickey. What, in your opinion, ought to be the volume of the 
currency, either per capita or in bulk ? 

Mr. Scammon. I have no hesitation in saying that the volume of the 
currency ought to be greatly increased — not all at once but gradually in- 



62 DEPRESSION iN LABOR AND BUSINESS. 

creased to at least double its present volume. My own opinion is, that a 
large volume of currency does away with indebtedness, and that more 
currency is needed in this country than most people think. I think that 
instead of doing the business of the country on individual indebted- 
ness and on individual credit, we should do it on the credit of the gov- 
ernment, and for ready pay, thus dispensing with the money changers. 
I believe that there is as much occasion now for somebody to drive the 
money changers out of the temple of the nation, as there was when 
the Lord was on the earth. 

Mr. Dickey. Then I understand your opinion to be, that the currency 
ought to be gradually increased until it reaches about $1,500,000,000 1 

Mr. Scammon. At least that. 

Mr. O'Connor. Your theory, if I understand it correctly, is, that when 
the volume of currency is contracted, the currency is made dearer, and 
all other property is made cheaper in its relations thereto ? 

Mr. Scammon. All other property is not only made cheaper in its re- 
lations to money, but you give money an absolute dominion, and you 
make it the slaveholder of every other species of property. 

Mr. O'Connor. Do you believe that if the Secretary of the Treasury, 
who recently redeemed one hundred and ninety-five millions of live- 
twenty bonds in four percent, bonds, had redeemed them irr legal-tender 
notes lie could have floated these legal-tender note.s at par with gold ? 

Mr. Scammon. I think that he could do it gradually. Two things 
must be considered : One is physical ability, and the other is public 
opinion. Now, for a hundred years in this country our only idea of money 
has been substantially a paper money issued by an individual and re- 
deemable in coin; and it is so ingrained in the ideas of the American 
people that nothing is money except gold and silver, that if you under- 
took to issue a very large volume of currency at once you would come 
in contact with the prejudices of the people. The men who want to 
make the money (as the bankers did before the war), and to get rich by 
making it, are shrewd men. They are business men and they know 
what their interest is. These men would work on the prejudices of the 
people; and the people who have been so long accustomed to thiuk that 
a bank note is good for nothing unless it is redeemable in coin would 
be aroused. So that you would have to proceed very gradually. I have 
no doubt whatever that the entire national indebtedness of the United 
States could be gradually converted into currency, and the currency 
kept at par, and I have no doubt that iu that case this country would 
be the richest country in the world. We should have no use for gold 
and silver in the country; and we have got no use for it now, practically. 
Gold and silver should be used, as God intended they should be, as that 
kind of merchandise which is most convenient to pay foreign balances. 

Mr. Martin. Do you think that this currency so issued should be 
convertible into coin % Do you think that the amount of circulation 
should be so limited that it could be convertible at any time into coin I 

Mr. Scammon. No, sir ; but I think that it should be convertible either 
into coin or into government bonds. 

Mr. Martin. You said that it should be floatable at par. What did 
you mean by that % 

Mr. Scammon. You will admit that money is a purely artificial thing. 
Whatever the law makes money, is money, and the law can make 112 
grains of silver a dollar just as well as it can make 120 grains a dollar. 
When I say that currency should be floatable at par, I mean this : I 
believe that this is the richest country in the world. I think that the 
credit of the American Government is sufficient to make reliable money of 



DEPRESSION IN LABOR AND BUSINESS. 63 

itself — if you please, fiat money ; but I think that public opinion, theopin- 
ion of the people of the country, is that everything that the government 
issues as money must be measured by gold and silver, and that there- 
fore in order to have no disturbance, and in order to introduce this thing 
gradually, you must not issue any more money than you can maintain 
at equal value with coin. My own opinion is that an interconvertible 
government bond bearing a small rate of interest would be preferred to 
coin by everybody who did not want to use the money immediately. 
One reason why I would not make it universal is this : I have been a 
banker for 25 years, and I know that if the government ever did that I 
would not let money remaiu in m} 7 vaults, but I would put it in bonds 
and make the government pay interest upon it. 

Mr. Martin. This $1,500,000,000 of currency which you would issue 
would you have based it upon gold and silver, or would you have it con- 
vertible into coin % 

Mr. Soammon. I would have it convertible into coin, or into that 
which is equivalent to coin. I would not leave the option with the 
banker, so that he could make a corner on government bonds. But I 
would have the government make this paper money receivable lor all 
dues. My own opinion is that we should have been >it specie payment 
four or five years ago if that had been the law. I would provide that 
if any man had a surplus of this paper money he should have the right to 
put it into interconvertible government bonds of equal value with coin, 
and paying interest, but I would have it convertible into coin or bonds 
at the option of the government. 

Mr. O'Connor. On the idea that the $1,800,000,000, of the bonded 
debt of the government to-day is at a premium in gold % 

Mr. Scammon. If I were a theologian, I would say that I believe that 
under Divine Provideuce this indebtedness is a bridge to carry us over 
this large trouble, and that instead of the government debt being a 
burden it should be made a blessing by converting it all gradually into 
currency. 

Mr. Martin. Is it your opinion that you have a depression of busi- 
ness here in Chicago ? 

Mr. Scammon. Undoubtedly. The small people are having hard 
times. A great historian has said that the prosperity of a community 
has to be regarded in two aspects — one from the point of view of the 
general prosperity of the country as compared with other countries, and 
the other from the point of view of the general happiness of the peo- 
ple composing the country. 

Mr. Martin. You say that this depression commenced in 1872, and 
that it still continues? 

Mr. Scammon. I say that we had the premonitory symptoms of it in 
1872, but that it was then arrested by the government by the deposit 
of five millions in the New York banks. 

Mr. Martin. You say that the banks all broke in 1873? 

Mr. Scammon. Yes. 

Mr. Martin. Did not the depression commence then ? 

Mr. Scammon. No; the depression commenced in 1872, when the 
West called upon New York to give money to move the crops. The 
deposit of five millions by the government in the New York banks 
bridged the difficulty over to 1873, but only to make it worse when the 
panic came in 1873. 

Mr. Martin. You speak about the people of this city not paying their 
taxes. Are they not able to pay their taxes ¥ 

Mr. Scammon. No, sir ; they are not. 



64 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Martin. In consequence of what ? 

Mr. Scammon. On account of the depression in business. 

Mr. Martin. Is not your property valued very high ? 

Mr. Scammon. I think not. 

Mr. Martin. How much per cent, is your tax here? 

Mr. Scammon. $4.04 per cent. Our property for taxation purposes 
is generally valued at about 33|- cents on the dollar. But the trouble 
is this : the panic utterly annihilated a large portion of the property of 
Chicago, and of the surrounding country, so far as all availability is 
concerned. 

Mr. Martin. You speak of property not being salable here for what 
it cost to put up the buildings ? 

Mr. Scammon. Yes. 

Mr. Martin. Is it not true that the buildings here have cost you too 
much ? 

Mr. Scammon. No, sir. 

Mr. Martin. Where did you get the brick from ? 

Mr. Scammon. We got some of it from abroad. 

Mr. Martin. Did you not get a vast quantity of it from Philadel- 
phia?. 

Mr. Scammon. No, sir ; a very small quantity. 

Mr. Martin. I have understood that a vast quantity of your brick 
came from Philadelphia, and that it cost a good deal of money. 

Mr. Scammon. There were a few car-loads of fine Philadelphia pressed 
brick brought here, but not beyond that. 

Mr. Martin. Is it not true that .these buildiugs in fact cost you too 
much money, and that that is the reason why you cannot sell them now 
for what they cost? 

Mr. Scammon. No, sir; we calculated, wheu we were rebuilding the 
town, that we were to lose three or four years' rent on the property by 
reason of our rebuilding in those times. But you cannot sell a good 
deal of our property here now for what the buildings would cost in or- 
dinary times. 

Mr. Martin. I understood you to say that most of the men who had 
rebuilt Chicago were now insolvent? 

Mr. Scammon. That is so. 

Mr. Martin. What proportion of the men who rebuilt the city are 
now insolvent, and what is the reason of their insolvency? 

Mr. Scammon. They are insolvent just for this reason: that they bor- 
rowed the money to build and have not been able to pay it back. 

Mr. Martin. Where did they borrow it? 

Mr. Scammon. From the insurance companies, the Connecticut Mutual 
Life Insurance Co., the Equitable Life Insurance Co., the Charter Oak 
Life Insurance Co., and the trustees of societies all over the country. 
They put their money into these buildings, and when they got the build- 
ings up the panic came. 

Mr. Martin. When were the buildings put up? 

Mr. Scammon. In 1872-73. The fire was in the fall of 1871, and the 
buildiugs were put up in 1872-73. In consequence of the panic, and 
in consequence of so many men being thrown out of employment, and 
of the geueral depression of business, three-fourths of the buildings that 
I put up have not been occupied. 

Mr. Martin. Then you ought to put down your rents so that they 
can be occupied. 

Mr. Scammon. I have offered to let men have the buildings at any 
price. I have rented a good many of them for less than the taxes, and 



DEPRESSION IN LABOR AND BUSINESS. 65 

in some cases I have let people in, and have tried to help them to get a 
living, and have lost what I gave to help them. The truth is that the 
panic came and hit us all " between wind and water."' We had just got 
our buildings up, calculating that we should have lost the rent of three 
or four years, but thai at the end of that time the property would have 
been at a fair value. 

Mr. Martin. Are we to understand that a majority of the gentlemen 
who rebuilt the city are insolvent ? 

Mr. Scammon. Yes; that is so. Most of them have taken the benefit 
of the bankrupt law. 

The Chairman. What number of them has taken the benefit of the 
bankrupt law ? 

Mr. Scammon. I will get the number. I think it is between four and 
seven thousand. 

Mr. Martin. Was it the indebtedness created in the rebuilding ot 
the city, or was it an indebtedness existing prior to those hard times, 
which caused so mauy people to go into bankruptcy f 

Mr. Scammon. I think that in the main the indebtedness has been in- 
curred since the fire. A good deal of it existed before the lire, but I 
think that those men were solvent, and would have been solvent but for 
the panic. 

Mr. Martin. Because their creditors did not come down upon them ? 

Mr. Scammon. No ; the creditors were generally very good. After 
the fire here the creditors would settle and take anything that a man 
could pay, and every man who supposed that he was insolvent just paid 
his creditors what he thought he could pay them, and they discharged 
him. 

Mr. Martin. Were not a good many of those people who went into 
bankruptcy insolvent before 1871 % 

Mr. Scammon. Of course some of them were, but Chicago was ex- 
ceptionally a prosperous city. There had been good crops in the coun- 
try, and beef and pork bore high prices, and we were exceptionally 
prosperous. 

Mr. Cowgill. Is it not a fact that the fiuaucial distress in this city 
is more owing to the large destruction of property by the fire than it is 
to the panic? 

Mr. Scammon. In this sense it is : You cannot wipe out $200,000,000 
of property by a great fire without making a big hole. 

Mr. Cowgtll. Is it not chiefly from the fact that men who have been 
your customers and tenants and who have occupied your buildings 
were utterly ruined by the fire, and have been unable to rent buildings 
or to do business? Is it not that which has deprived you of tenants, 
and is not that the chief cause of your houses remaining idle ? 

Mr. Scammon. I think not. During the last five years everybody 
here has been wearing old clothes, has been economizing, has been gel- 
ting down to hard-pan, has been wearing his old shoes aud old hat and 
old clothes, and our wives have been wearing out their old dresses. 

Mr. Cowgill. Was not that caused very largely by the destruction 
of property in the great fire % 

Mr. Scammon. So far as the city of Chicago is concerned that is un- 
doubtedly true to some extent, but the city of Chicago is a very small 
thing in relation to the whole business of this country. 

Mr. Cowgill. I ask these questions simply in relation to those houses 
of yours that are tenantless? 

Mr. Scammon. But for the depression tbey would have been all oc- 
H. -Mis. 5 5 



66 DEPRESSION IN LABOR AND BUSINESS, 

cupied. The fire brought a vast Dumber of people here to occupy 
houses. 

Mr. O'Connor. This depression of business, which you have ascribed 
to the contraction of the volume of circulating medium, has not been con- 
fined to Chicago, has itf 

Mr. Soammon. I think not. 

Mr. O'Connor. Is it not universal over this country? 

Mr. Scammon. So far as my knowledge extends it is. The men who 
monopolize business in Chicago are prosperous. For instance, take a 
dry-goods establishment like Field, Leiter & Co., or a grocery house like 
TCeed, Bullitt & Co., or any house here that is doing a monopolizing busi- 
ness of any kind, and they are generally making money. 

Mr. Cowoill. You do not know of any person having anything to 
sell that anybody else wants who cannot get cash for it at the market 
price. Is there uot plenty of money here and all over the couutry to 
pay for anything of the kind ? 

Mr. SCAMMON. Yes ; but the trouble is that the market price is not 
half what it should be. 

Mr. Cowgill. Previous to the panic of 1873, have you not known not 
only produce but labor and everything of that kind very much lower 
than you have known it since that panic? 

Mr." Scammon. It was lower from 1837 to 1842, but with that excep- 
tion I have never known it to be lower. I am told that it was lower 
iu 1861, but 1 had been abroad and had ouly just come home then. 

Mr. Sherwin. You ascribe the panic of 1873, as you do ail panics, to 
the contraction of the currency ? 

Mr. Scammon. l"es. Of course there may be other causes, but that 
is the great paramount cause of all panics. 

Mr. Sherwin. This panic of 1873 you say was caused by the contrac- 
tion of the currency ? 

Mr. Scammon. Yes. 

Mr. Sherwin. How was the currency contracted and how much was 
it contracted ? 

Mr. Scammon. I have in my office a statement from the Secretary of 
the Treasury showing how .much Mr. Sherman says it was contracted — 
a very considerable amount. 

Mr.^ Sherwin. Here is the last statement of the Secretary of the 
Treasury, dated July 1st, 1879, which shows the currency for every year 
since 1800 up to that time. 

Mr. Scammon. The fallacy in all those statements coming from the 
Secretary of the Treasury is that there was a good deal of money afloat 
which passed as currency that was not issued by the banks. 

Mr. Sherwin. This matter of the contraction of the currency is the 
point of your testimony, and I want to know just what the contraction 
consisted of. I would like your opinion and the figures. 

Mr. Scammon. I have not made the figures ; and any figures that any 
person makes must be very unsatisfactory and indefinite] because, fur 
instance, nobody knows the quantity of illegal or unauthorized circula- 
tion that was afloat, and that was used instead of money. 

Mr. Sherwin. If you have an opinion that there has been a contrac- 
tion of the currency you must have some figures on which you base 
that opinion, or else your opinion cannot be very satisfactory to your- 
self or to us. I would like to know how that currency was contracted 
and what kind of currency was contracted. 

Mr. Scammon. If you give me time to go to the office of the Inter- 
Ocean I will get a paper in which I figured this up. 



DEPRESSION IN LABOR AND BUSINESS. 67 

Mr. Sherwin. I would like you to furnish it to the committee. 

Mr. Scammon. I will show you the statement. The discrepancies iu all 
these statements about the contraction of the currency come entirely 
from the difference in the point of view. Everybody familiar with this 
country knows that there has been a good deal of paper made use of 
instead of money and that was not technically currency. 

Mr. Sherwin. It is so in all commercial countries at all times, is it 
not? 

Mr. Scammon. I think it is. 

Mr. Sherwin. Is it not so largely with our currency to-day % Is there 
not a great deal of that kind of currency afloat which does not appear 
in this statement of the Secretary of the Treasury % 

Mr. Scammon. I think not. 

Mr. Sherwin. What were the items of the currency in 1872 I 

Mr. Scammon. I do not carry them in my mind. My memory is not 
good as to the particular items, but I will give you the statement. 

Mr. Sherwin. I want to know the principal items that composed the 
currency at that time, whether they were legal-tender notes, national- 
bank notes, compound-interest notes, or what 1 

Mr. Scammon. I cannot give you a statement now, but I will furnish 
you with a statement, and send it in, showing of what, in my opinion, 
the currency consisted. But I wish to say another thing: Whenever 
you are on the down-hill road, and whenever you are contracting the 
currency, it is like a coming pestileuce ; the fear of it kills more than the 
pestilence itself. The apprehension of a scarcity of money causes a vast 
deal of hoarding by everybody, and the banks begin to sort out each 
other's notes and send them home, so that they diminish the volume of 
currency more than three times the amount of the actual notes that are 
sent home for redemption. 

Mr. Sherwin. You say that the law of supply and demand (which is 
God's law) is that which coutrols us in monetary matters % 

Mr. Scammon. I think so. 

Mr. Sherwin. State to the committee, pointedly, how you think that 
this law of supply and demand can be left so as to work fairly in cur- 
rency matters. 

Mr. Scammon. Just exactly as it was left in the State of New York 
before the war. There there was no limit to the currency except as to 
the amount of bonds that the banks could get. If more money was 
wanted at any time to move the crops, the New York bauker sent up his 
bonds to Albany and deposited them and took out the currency. After 
the crops were moved, aud when money became more plentiful than was 
needed, the bauker returned his bills to Albany and took up his bonds 
and sold them. I think that that could be done exactly by the system 
of interconvertible bonds. 

Mr. Sherwin. Is not our national-bank note system just such a sys- 
tem J ? 

Mr. Scammon. Yes ; it is just such a system, with this exception, that 
the whole business of the country and all the finances of the country 
are placed under the control of the national banks. 

M. Sherwin. Under the national banking act anybody who has 
money can start a bank? . 

Mr. Scammon. Yes. 

Mr. Sherwin. Five hundred laboring men by putting in a hundred 
dollars a piece can start a national bank % 

Mr. Scammon. Yes. 

Mr. Sherwin. Then how can yon have a monetary system more free 



68 DEPRESSION IN LABOE AND BUSINESS. 

from monopoly than just such a system unless vou abolish oroperty en 
iirely % 

Mr. 'Scammon. There are conditions to the establishment of a 
national bank. You have first got to form your association, and you 
have also got to introduce the element of trust between man and man. 
But if you had it so that every man could go to the Treasury with his 
notes and get bonds, and could then return his bonds and get money 
again for them, you would have a simple matter. 

Mr. Sherwin. You would only diffuse the tyranny of capital after 
all? 

Mr. Scammon. I have not said a word about the tyranny of capital ; 
I hold to capital, I hold to property. This is what I complain of: There 
are two parties making war upon property. One is the socialist, the other 
the moneyed man. Property is a very great blessing. 1 want property 
to be free ; I want to have every man's property protected; but I do not 
want to give one species of property the advantage over another. 

Mr. Sherwin. You have a reputation in the West as a philanthropist 
as well as a man of capital. Would it not assist business and assist 
laboring men, for instance, to instruct them and show them how they 
could operate to become their own bankers under the national banking 
act ; how by their small savings five hundred of them, putting in $100 
a piece, could start a bank and have it under their own management ■? 

Mr. Scammon. I have no doubt that co-operation is a philanthropic 
and wise policy, and that it will be adopted in the future to a greater 
extent than it has been heretofore. The kind of information that you 
speak of is always useful. 

Mr. Sherwin. Do you not know that in Germany they have just such 
banks — except that they are not banks of issue — where the laboring men 
have formed co-operative societies and have established banks which 
have been of great use to them 1 

Mr. Scammon. I do not know how it is now. W T hen I lived in Ger- 
many it was not so. 

Mr. Sherwin. I take Mr. Tom. Hughes's statement for that. 

Mr. Scammon. Mr. Hughes is a philanthropist and a wise man from 
the standpoint that he takes. I have no doubt that our national bank- 
ing system is the best banking system that ever existed in the world. 

Mr. Sherwin. Then the principal objection that you have to the 
national banking system is the power which you think it gives the 
banks to control the money of the country, to make factitious prices 
and to make money scarce? 

Mr. Scammon. I do not know that I have said anything against the 
national banks at all. 

Mr. Sherwin. Would you havenatioual banks coexist with the issue 
of money by the government ? 

Mr. Scammon. I have been educated as a conservative old-line whig, 
and I am always in favor of proceeding in all legislation in a conserva- 
tive way. If I had my way I would let the national banking law alone 
just as it is until this other experiment is tried. If my views are cor- 
rect about the interconvertible government bond, then by the time that 
the charters of these national banks expire it will be very easy for the 
government to wipe them out without producing any disturbance of 
public confidence. 

Mr. Sherwin. If it should turn out that the government should is- 
sue money, what would be the rule by which the government would 
determine the amount to be issued ? 



DEPRESSION IN LABOR AND BUSINESS. 69 

Mr. Scammon. I think that until the government debt is paid off 
that would determine it. 

Mr. Sherwin. You would issue money enough to pay off the debt ? 

Mr. Scammon. I would have the government issue its own paper for 
every dollar of expenditure by the government ; I would have the gov- 
ernment use all the coin that comes iu, which is not demanded for the 
redemption of its own paper, in paying off the government bonds. That 
experiment would determine whether my views are correct or not. My 
opinion is, that there is no demand for gold aud silver in this country 
for mouey. Everybody that I know prefers a national-bank note or a 
Treasury note to gold or silver. 

Mr. Sherwin. Secretary Sherman stated that he has paid over 
8100,000,000 of bonds in national-bank notes and legal-tender notes. 
Does not that meet the idea which you have advanced? 

Mr. Scammon. Just as far as you use the credit of the government for 
currency, just so far you accumulate the volume of coin which you may 
use (or paying off government bonds. 

Mr. Sherwin. Do you think that the Secretary of the Treasury could 
have paid out this $120,000,000 of paper currency if he had not provided 
a specie reserve for the redemption of the greenbacks J ? 

Mr. Scammon. That involves a great many things. I think that if 
the Government of the United States had declared five years ago that 
there was to be no legislation about resumption, but that the govern- 
ment notes and the national-bank notes would be received for all dues 
of the government, we should have been at par four or five years ago. 
Nobody would have wanted coin. 

Mr. Sherwin. Has there ever been such a currency in such an amount 
kept at par? 

Mr. Scammon. I do not think that there has been, but there never 
has been such a country as America before. 

Mr. Sherwin. Theu it is merely an opinion of yours — an experiment ? 

Mr. Scammon. Yes, it is an experiment; but Prussia never found any 
difficulty in circulating at par all the Prussiau bank notes that the gov- 
ernment chose to issue. 

Mr. Sherwin. Would it be safe legislation for the government to de- 
part from a principle of currency which seems to have been in use by 
all civilized nations in order to enter on a course in which there has been 
no experience? 

Mr. Scammon. I do not know anything American that is not an en- 
tire departure from the other experience of men. The Lord Almighty 
made a great ocean between here aud Europe, and if not we could 
never have established an independent government or maintained a 
republic. I do not think that we want to look behind us to Europe, 
Asia, or Africa. I think there was a time when it was important to do 
so — duriug the infancy and childhood of the country. But we have 
now arrived at its manhood, and we had better remember what the old 
Methodist psalm says, "Look not behind you; remember Lot's wife." 

Mr. Sherwin. The laws of commerce and the laws of human nature, 
I suppose, are the same here as in England, Prussia, and Frauce? 

Mr. Scammon. I do not think that they are. The idea that all power 
comes from the Crown, and the idea that the nobility aud gentry possess 
all the wisdom of a country, are European ideas. I think that they 
permeate everything there. I thiuk that while they were good for us in 
our infancy and childhood, they are not good for us now. I thiuk, on 
the contrary, that our own statesmen are wiser in everything that re- 
lates to the public good for this country than any European statesmen 



70 DEPRESSION IN LIBOR AND BUSINESS. 

are, for I have do doubt that English statesmen are wiser for what re 
lates to England. 

Mr. Sherwin. What effect has the fact of England being an aristo- 
cratic government on the money question? 

Mr. Scammon. It has this eifect: It is another form of the doctrine 
that all power comes from the Crown. 

Mr. Sherwin. You do not say that that underlies the financial system 
of England ? 

Mr. Scammon. I say that it underlies the entire financial system of 
England, just as it underlies the constitution which formed the Consti- 
tution of the United States, when the Constitution gave to the little 
States of Delaware and Rhode Island the same power as it gave to tue 
great States. 

Mr. Sherwin. Would it not be better to leave the issue of paper 
money to the people themselves, through the banks, with certain restric- 
tions as to security, and let the banks issue it? Would not that take 
away this element of government interference? 

Mr. Scammon. I understand that the difference between a free people 
and a free government, and a monarchical people and a monarchical 
government, is this : not that both countries do not require a govern- 
ment, but that in the one country it is enunciated that all power rests 
in the people, and that it is the aggregate wisdom of the people that is 
to determine the iorm of the government. Whereas the notion in Eu- 
rope and Asia is a patriarchal notion. In Asia they look up merely to 
the head of the family, or to the head of the tribe, for all power. Eu- 
rope is merely a half-way house between despotism and freedom ; it is a 
country of limited monarchies, and you will find that all the opinions of 
Europe (growing more republican as yon approach the Atlantic, and 
less republican as you go east) are all saturated with that idea ; while 
the idea that the people themselves can make and create a currency is 
a purely republican idea. 

Mr. Sherwin. Currency must be based upon an exchange of prop- 
erty. The demand for it comes from exchanges of property. 

Mr. Scammon. Yes, but what is a bank? How was the first bank 
established in New England ? It was in this way : The people in a small 
neighborhood had not the means of commerce to do business among 
themselves, and they came together and brought in their little money, 
and made a pool of it. If they put in $25,000, they issued perhaps; 
$50,000 of paper, and lent it out to each other. It was substantially a 
government bank, but a government bank of that little neighborhood, 
of that nucleus of citizens. That was the beginning of American bank- 
ing. What I think the government should do is substantially the same 
thing. I am not opposing national banks, but I am saying that we want 
more currency. 

Mr. Sherwin. Do you not think it wiser for the government to keep 
its hands off, and leave this furnishing of the money to the banks, the 
government simply providing that it shall be properly secured ? 

Mr. Scammon. In my principle I do not make any distinction be- 
tween the government and the people. I understand the government 
as the organized governmental expression of the will of the whole peo- 
ple. 

Mr. Sherwin. Supposing that 500 men here had a surplus of $100 
apiece, and felt inclined to go into the banking business, and that there 
is a law which enables them to do it, but that the government has mo- 
nopolized the issue of money. Do you think it right for the government 
to assume that position? 



DEPRESSION IN LABOR AND BUSINESS. 71 

Mr. Scammon. I do. I think that the government is the people. 

Mr. Sherwin. Bat that would be an antagonism to the people. 

Mr. Scammon. No; the government is the people. The trouble with 
our finances is this : Immediately after the war, Mr. McOulloch went 
into the Treasury with the same ideas that he had while he was presi- 
dent of the State Bank of Indiana. He had the idea that the Treasury 
was his bank ; and that idea has been followed by every Secretary of the 
Treasury since. They have run the Treasury with the idea that their 
bank must be taken care of, no matter what may be done with the peo- 
ple. Therein has been the fallacy. 

Mr. Sherwin. Then it is not safe to intrust the government with these 
matters all the time. 

Mr. Scammon. O, yes ; but it is safe to have the people instruct their 
representatives. 

Mr. Sherwin. The people did instruct the representatives who passed 
the contraction law, and you have found fault with Congress for doing 
so. Future Congresses will not be any better. How, then, can they be 
trusted? 

Mr. Scammon. I think that the world is getting better. We have had 
panics aud contractions from time to time, and always from one cause. 
I hold that if all the money were issued by the government, nobody 
would ever be afraid that the government would break, and therefore 
there would never be a run upon the banks. 

Mr. O'Connor. Were there anv savings institutions in this city prior 
to the panic of 1873? 

Mr. Scammon. Yes. 

Mr. O'Connor. What became of them? 

Mr. Scammon. Some of them went up, and some went down. None 
of them exist now, or if there are any they are very small affairs. Most 
of the savings banks would have been good to-day if their securities 
had uot so diminished that their customers could not pay them. 

Mr. O'Connor. What was the cause of the shrinkage of the securities'? 

Mr. Scammon. The contraction of the currency. 

Mr. O'Connor. How many of these savings banks were there? 

Mr. Scammon. I think there must have been half a dozen or more. 

Mr. O'Connor. Was there great distress produced among their de- 
positors by their failure? 

Mr. Scammon. Yes ; very great. 

Mr. O'Connor. What time did the crash of these institution? take 
place ? 

Mr. Scammon. When the panic first began the assignees and receivers 
of the insolvent firms deposited their money in these banks; that car- 
ried the banks along until the dividends had to be made, and then a 
few of the weakest ones went down immediately. The others went on 
until all of the dividends had to be paid, and then they went down. 

Mr. O'Connor. Cotemporaneously with the fall of other institutions 
in other parts of the country? 

Mr. Scammon. Yes. 

Mr. Dickey. How many banks in this city have failed since 1873 ? 

Mr. Scammon. I do not know, but I should suppose that the majority 
of the banks have failed. 

Mr. Dickey. Twenty or thirty of them? 

Mr. Scammon. Twenty of them, perhaps. 

The Chairman. All since 1873? 

Mr. Scammon. Yes. 



72 DEPRESSION IN LABOR AND BUSINESS. 

Mr. O'Connor. Has the ratio of immigration to your city since 1873 
been equal to what it was between 1860 and 1873 *? 

Mr. Scammon. O, no. A large number of people here could not get 
employment, and have gone off from here into the mining districts and 
into the farming districts all over the country. 

Mr. O'Connor. Then you believe that if this crisis had not come upon 
the country (which crisis you ascribe to the financial policy of the gov- 
ernment) Chicago would be much more prosperous to-day than it is? 

Mr. Scammon. O, yes; I have no doubt of that. I do not suppose 
that any commercial people can ever avoid ebbs and flows of business, 
but this panic was a flood of destruction which might have been avoided. 

The Chairman. You say that you are in favor of letting the national 
bank law remain as it is. In making that statement did you take into 
consideration the question of the national bank issue, and of leaving 
that also as it is, to have that issue retained? 

Mr. Scammon. I have no objection to it. I consider that question a 
very subordinate one to the great question of furnishing the people with 
an amount of currency adequate to meet the business demands of the 
country. I would not get, up an unnecessary issue with the national 
banks, but if they make war upon us we would have to fight back. 

The Chairman. The question is whether the legal-tenders are not a 
better currency than bank notes. 

Mr. Scammon. I think they are; I have no doubt about it. But I 
think the legislation of England which allows institutions of that kind 
to go out gradually is always better thau sudden destruction. I would 
let these old banks alone. I would let their charters expire. But I 
would not give them any more circulation. 

The Chairman. The great bulk of national banks were incorporated 
in 1862, and their charters run for twenty years. 

Mr. Scammon. Yes. So far as the banks in Chicago are concerned, 
it is the general opinion of the bankers here (and it was my opinion as 
a national banker) that the circulation was an injury to the banks. The 
old system of banking was like the old system of securing the manufac- 
turing power in New England. It was by dams, by puttiug up great 
reservoirs of water, so that when a storm came and the dam gave way 
the catastrophe destroyed the manufactory and the people together. 
Now, if the government issue the currency no reserves are needed, and 
then the amount that is kept in the banks as are serve for their circu- 
lation could be thrown into the hands of the people. 

The Chairman. The issue of legal-tender money is what Mr. Chase 
called cutting the credit of the government up into small strips. 

Mr. Scammon. Yes. 

Views of Mr. Joseph K. C. Forrest. 

Mr. Joseph K. C. Forrest came before the committee in response to 
its invitation. He stated in reply to preliminary questions that he has 
been for nearly forty years a resident of the city, and a writer for the 
press. 

The Chairman. Give us your opinion with reference to the causes that 
have produced the great depression in labor and business throughout 
the country. 

Mr. Forrest. I think that the cause of the depression has been, what 
we call in a general way, the panic, and that that was caused by the 
very great increase of what I call the personal money of the country as 
compared with the impersonal money. The personal money of the 






DEPRESSION IN LABOR AND BUSINESS. 73 

country that comes in and out of the clearing houses and banks got so 
large in volume that the equilibrium between it and the impersonal 
money was lost. When the bank notes got so scarce that they could 
not be exchanged for impersonal credits (which is money too) the thing- 
broke down. Jay Cooke & Co. failed, and the rest followed. In Eng- 
land in a similar panic, in 1866, the governor of the Bank of England 
testified that the bank discounted some 8230,000,000 new business paper 
in less than three months, and paid out the entire reserve of the bauk 
before the chancellor of the exchequer got out of his bed on the day the 
" order in council " suspending the bank act was passed. The object of 
that was to restore the equilibrium between personal and impersonal 
money in Great Britain, otherwise the whole fabric of British society 
would have fallen in pieces. In this country we had no power to restore 
the equilibrium. If we had the kind of money then that we had in 1857, 
I think the panic would have been over iu a year or two, but the money 
was too good and the people hoarded it, and the result has been that the 
pauic has been on us ever since, but we are now escaping it through Mr. 
Sherman's inflation currency. He is inflating the currency now. The 
clearing-houses are daily increasing the volume of currency. 

The Chairman. I thought that the policy of Secretary Sherman was 
contraction of the currency. 

Mr. Forhest. No. He says in his speech in Maine that the currency 
has been inflated, that he has resumed on an inflated basis. Aud he 
has done so, and he will break down, because unless you have a central 
bauk in this country like the Bank of England, working on a specie 
basis, you must break down. There is no contraction about Mr. Sher- 
man's policy. It is all expansion now. Every dollar of silver and every 
greenback that he issues is increasing the volume of the currency now, 
and if you ask me whether I would put more greenbacks into currency, I 
would say no, sir. 

The Chairman. You are giving us new light on this question. 

Mr. Forrest. The Bepublican party, which is the government to- 
day, has started this resumption, aud we have got to see it through, but 
I do not believe that resumption can be maintained iu this country with- 
out a ceutral national bank that will discount the paper of the country, 
and that will have power to contract aud to expand the currency accord- 
ing to the wants of the people. Money is a monopoly in itself just like 
the railroad and telegraph systems of the country, aud the government 
must finally come to the policy of having a national fiscal agency. I am 
an Alexander Hamilton man. 

The Chairman. Suppose that we were to repeal the resumption act, 
would it be necessary then to arid to the volume of the currency ! 

Mr. Forrest. I think it would. You asked Mr. Scammon how much 
the present circulation was. You cau only judge of the circulation by 
discount on paper money. If the discount on paper money rises you 
must stop its issue. You cannot create it out of nothing without com- 
ing to an end of that tether. There must be an equilibrium between 
money and other property. The policy of this country must be plenty 
of money. We must raise the prices of our property here higher than 
the prices of property in Great Britain. You are selling to Great Britain 
now on the low basis of your values, and are buying from her on the 
high basis of her values. Great Britain to day has more money to loan 
than ail the rest of the world besides. Her gold money is worth 9 J per 
cent, more than ours. I mean that the weight of gold in her com is 9 J 
per cent, greater than the weight of gold in our coin, so that she offers 
to buy the money of the world at 9h per cent, more than any other 



74 DEPRESSION IN LABOR AND BUSINESS. 

country offers. We have got our warehouses full of goods, and Great 
Britain buys thetn with our watered currency, but she sells us her own 
property at high valuation. That is the reason why the balance of trade 
is always against her. We are now losing because the balance of trade 
is in our favor. We are giving away our property. We are undervalu- 
ing our property for her benefit, and making our money dearer for her 
benefit. 

The Chairman. What remedy would you propose "? 

Mr. Forrest. I voted for Mr. Tildeu because he was in favor of post- 
poning the resumption act. You cannot resume specie payment in this 
country without a central national bank, but you can go on without specie 
payments without that central national bauk, because when the dis- 
count on paper money gets too high Congress can reduce the circula- 
tion. As the prices rise, this will be a good market for Great Britain 
to send her merchandise to, and she has commenced sending it already. 
She is cutting down the prices of her labor to such a rate that she will 
be able to wipe out American labor. She has already got our com- 
merce away. She is to day mistress of the seas, and now she is prepar- 
ing her financial system so that there will be no country in the world so 
prosperous as Great Britain will be in the next ten years. We are help- 
ing her to it, because she is getting our property for nothing. She got 
our bonds at 50 cents on the dollar, and paid us in merchandise at in- 
flated prices, and now she is selling those bonds at over a dollar, and 
taking our merchandise at a reduction of 50 per cent, below what was 
its value then. 

The Chairman. You would not suspend the exportation of our pro- 
ducts to Europe? 

Mr. Forrest. No; but I would raise the prices of them so that the 
English would have to come and buy them at our prices. The money 
or a country is the equivalent of the property of a country. If you are 
in Africa, where they have got no money, you can buy an elephaut for 
a few beads, which elephant you can sell in London at a thousand 
pounds. Why is that so "? It is because in Africa there is no universal 
equipollent of property in relation to its value in the world at large. 
The balance of trade is always in favor of India. Why % Because she 
is stripping herself for the benefit of Great Britain. 

The Chairman. What remedy would you propose? 

Mr. Forrest. You cannot do anything now ; you have got to let 
Mr. Sherman try his experiment. 

The Chairman. Have you anything to suggest in the way of legisla- 
tion \ 

Mr. Forrest. I would have repealed the resumption act at that 
time, but you cannot do it now, because the people think that it is all 
right. For my part, I have a great contempt for the mass of the people. 
Now, as to labor: The laborer now gets only a dollar a day where he 
used to get two dollars a day. Of course the idea among Republicans 
is that the dollar now is worth as much as the two dollars were before. 
But there is a great fallacy in that, because the higher a man's income 
is the more he can lay by. My father employed 500 men on his farm in 
Ireland, and in that time ten pence a day was the rate of wages. Now, 
how much could a man lay aside out of that ? But if the price of wages 
is two dollars a day instead of ten cents, there is some chance of a man 
laying by something out of his wages. During the prosperous condi- 
tion of the country, all the savings banks were piling up money because 
the laboring classes were all earning money, but when the depression 
came, and when the government commenced the policy that money was 



DEPEESSION IN LABOR AND BUSINESS. i ;> 

to be the only thing that was to be kept at high rates in this country, 
the savings banks all went to ruin. Stay-laws had to be adopted, and 
debts had to be repudiated. In fact, the value of property has been de- 
stroyed by making money so high. 

The Chairman. Is labor very much depressed here? 

Mr. Forrest. Yes; and so is property. I had a lot within four or 
five blocks from here that was burned over in the great fire. Then I 
built a house on it that cost me $30,000, and the second fire destroyed 
that house. The lot was valued at $000 a foot, but to-day I cannot get 
$100 a foot for it. Now, for Mr. Randolph to come here and say that 
this city is more prosperous than it ever was before the war, is the most 
ridiculous thing I ever heard of. Money is a monopoly in itself. You 
must have some power to regulate its volume in the interest of the 
whole people. Mr. Scammon's idea that you can have a sort of auto- 
matic arrangement of money is absurd. You cannot have it. The 
value of the money of a country is not determined by the credit of the 
government, but by the necessities of the people. The people of this 
country want a large volume of currency, and they must have if. George 
Smith's money, that you heard of yesterday, was a forced loan upon the 
people. 

Views of Mr, William Halley. 

Mr. William Halley came before the committee as a volunteer 
witness, and stated, in reply to preliminary questions, that he was a 
resident of the city of Chicago, and that his business was that of priuter 
and publisher. He read the following statement : 

Gentlemen of the Committee : I have been invited to appear be- 
fore your honorable committee for the purpose of communicating to you 
my views on the causes which have led to and continue the present de- 
pression of labor and business in the United States. I do so with pleas- 
ure, and thank Congress for this opportunity given the representatives 
of the laboring, producing, and trading classes to be heard before its 
bar, that they may tell you of their sufferings, complain of their griev- 
ances, and suggest their remedies. 

I understand you propose to give the widest latitude to your wit- 
nesses, and that the evidence you are taking is not onesided, biased, or 
to serve any particular party. The complexion of your honorable com- 
mittee, I thiuk, ought to be satisfactory to us on this point. I shall 
therefore express myself to your honorable committee without doubt or 
reservation, and propose to be ingenuous to you without being purposely 
offensive to others. 

My experience is varied, and my observation considerable. 1 have 
been a merchant; I am, by trade, a printer: by profession, a journal- 
ist. 1 have paid a good deal of attention to politics, the science of gov- 
ernment, by which communities are created and society made civilized, 
but I have never been in Congress. I have been a privileged guest on 
the floor of the English Commons, and, by way of reversing it, a mem- 
ber of Denis Kearny's commons in California. 

I appear here at the instance of the National party of Chicago, but 
will not undertake to represent the views of that party exclusively, A 
prominent journal of this city, iu its edition of Sunday, refers to myself 
and colleagues nsjiatisls, and calls upon us to tell your honorable committee 
how our scheme is to improve the material condition of the country. In 
pursaauce of this object, the first thing necessary is to inform you that 
although the great Chicago journals are excellent evidences of our ener- 
gy, enterprise, and indebtedness, they by no means are to be taken as 
the reflexes of our veracity, our justice, or our humanity. They belong 



76 DEPRESSION IN LABOR AND BUSINESS. 

to Wall street, the national banks, and they serve only the successful 
selfish classes. 

The journal referred to (the Tribune) either ignorantly or maliciously 
misrepresents us. The National party does not favor fiat money, what- 
ever it means by that. The term "fiat* is a word either coined or made 
prominent by the capitalistic press to scare brainless crows in the finan- 
cial wheat-field. To chauge the simile, it is the thing of straw which the 
stalwart Republican pugilists pouud to make the people believe they are 
fighting a monster of hideous mien. I don't know anything so grotesque, 
but, at the same time, so, humiliating, as the way in which the whole 
pack of bank-bought Eepublican orators, from Mulligan-man Blaine to 
the immaculate Schurz, denounced and made faces at this scare crow of 
their own invention last fall. If there were such a thing as a political 
cat-of-nine tails, I know no pack of political vagabonds to whose backs 
it ought to be more vigorously applied. I do not propose, however, just 
here, to discuss the financial question. 1 propose, with your permission, 
in giving my views on the present depression, not to confine myself to 
this one point. 

Generally speaking, I look upon the present depression as being 
caused by a departure from correct American ideas. This departure 
embraces the whole of our system, social, political, and financial. But 
before I go into the subject in the abstract, allow me first to be local. 
The impression is sought to be made on your minds that this is the 
wrong place to pursue your inquiries. That Chicago, at least, has re- 
covered her position of wonted prosperity; that her merchants are 
thriving as of yore; that real estate has recovered its buoyancy; that 
trade is brisk, vessel-owners making money, our farmers releasing their 
mortgages, employment plentiful, and wages remunerative. Do not 
believe a word of it. It is a cheat, to make you believe that the so- 
called resumption is bearing fruit. If you were to circulate incognito 
among our people you would learn the truth of rny assertion. There 
has been some improvement within a year, but it is noticeable only be- 
cause things could not be worse than what they have been. If there is 
an improvement, it is because our affairs, with our extraordinary facil- 
ities as the chief emporium of the vast Northwest, could not forever re- 
main as they were. If any place in these United States should show 
symptoms of improvement it is this. But no legislative or administra- 
tive action has benefited us; the policy of the dominant party or the 
press has not benefited us; Johu Sherman has not benefited us; and 
if Chicago is slightly rearing her head once more, it is owing to the force 
of the resistless genius of her position and destiny, in spite of and not 
with the aid of the policy of the present administration and the power 
that inspires it. 

I have inquired into the earnings of the various trades and find they 
are still at the minimum and work still scarce. I am told that in Massa- 
chusetts the boot and shoe business is better than here; that sewing- 
women still realize forcibly the sad plaint of Hood's "Song of the Shirt." 
The crimes of poverty, the police will inform you, are as numerous as 
ever. I saw a young man, a few months since, murdered by them in 
one of our streets because he had broken into a basement and stolen a 
pair of shoes to buy some bread ; and as I looked upon his pale, up- 
turned, hungered face in the moonlight, I thought of John Sherman, the 
honest money league, the corrupt politicians, the faithless press, and 
ground my teeth upon them in just indignation. I thought of the policy 
that made money "honest" and men dishonest; that made coin and 
contraction the master of enterprise and honesty, and made countless 
thousands mourn. 



DEPRESSION IN LABOR AND BUSINESS. 77 

You will be told, no doubt, that money is plentiful in Chicago. Some 
will have the hardihood to tell you it is cheap. I will tell you, gentle- 
men, how plentiful and how cheap it is. It is plentiful in the vaults of 
the capitalists and money merchauts. It is like wine in the vintner's 
cellar, the longer it is kept there the more valuable it becomes. It is 
that excellent commodity that earns while it is idle by causing contrac- 
tion and cheapening property. Its cheapness may be illustrated by the 
fact that you cannot borrow it ; neighbor will not lend to neighbor nor 
friend to friend. As oue of your honorable committee remarked to an 
interviewer, "A man puts $10 in his pockets and claps a pistol on top 
of it." That is, provided his pistol is not in pawn. The marketable 
real estate of Chicago is utterly unsaleable for the want of money to 
buy, and a few thousands of ready cash would buy acres of it in some of 
the best parts of the city. " Money is cheap," cries the lying capital- 
istic press. According to the State legislature it is only worth six per 
cent, per annum, but according to the broker it is six per cent, per 
month. Why, the pawnbrokers have been clutching their 10 per cent, 
per month, and doing a land-office business in every corner of the city, 
whose property is shown by the display of the ominous three balls of 
our very kind uncles. No, gentlemen, money is not cheap and plenty. 
Inquire into the cause of the collapse of our savings banks and the 
number of our bankrupts, which is so great as to fill a large volume in 
small type, and you will find that what 1 tell you is true. A friend of 
mine owns the materials of a small printing office, which is stored away 
for want of use, with a lien of about $150 upon it. Last week he tried 
fruitlessly to borrow money to raise the lien and put it into use again. 
I went with him to a broker to negotiate a loan of a couple hundred dol- 
lars on the value of the property, which he said was worth $1,200. With 
the usual shyness of the money-broker, he said he did not care to invest 
on such security. I asked him what the usual rate was, and he said six 
per cent, per month, but he was more liberal than the rest and some- 
times took five ! I asked him, under such a liberal system of extortion, 
would it be any wonder if there was a real and not fanciful bugaboo, 
and that the communists should rise up some day and cut the throats 
of all his class! Of course he denounced me as a communist at once. 
In cases of loans of this kind, and they are thousands, does not the 
borrower toil daily for the money lender until he has finally to hand 
him over his property? There can be no other result in nine cases out 
often. 

I recently published a cheap little volume here containing a selection 
of our most useful statute laws. It is such a volume as is necessary to 
everybody. Neither by agents, nor by the bookstores, nor by a per- 
sonal canvass could I sell enough to pay for my time, to say nothing of 
my outlay or profit. The almost invariable answer was "no money to 
bay anything but bread and butter," and this mostly from business men. 
For workingmen to buy any was a thing not to be thought of. There is 
no -money in circulation, and people are daily strained to obtain the 
most absolute necessaries. There is no encouragement for enterprise 
for the want of it. 

The trade to which I belong is considered to be one of the best re- 
munerated in the city. Priuters are better paid in Chicago than any 
place west of New York. This is chiefly owing to the existence of an 
efficient union. The wages of job-printers, who are the artists of the 
profession, are $18 per week of 59 hours. But it requires first-class 
hands to hold permanent situations. But there is a gradual scaling 
down from this figure to the minimum of nothing at all, as there are 



78 DEPRESSION IN IABOR AND BUSINESS. 

many who work for less wages than the union scale and dozens who do 
not get a day's work in a week. This is my fourth week without a day's 
work, and I am usually employed in one of the best offices in the city. 
There are some who have been longer without even casual employment, 
and how they live, feed, clothe, house, and cheer their families God only 
knows. Just now the trade is unusually dull, and there is, perhaps, 
twenty per cent, of the whole, union and non-union men, out of regular 
employment. 

The causes of the present depression in labor and trade are manifold. 
It is long continued, and worse than that dark period of our history the 
time of the embargo, in the early portion of the century, showing a 
complex burden, a series of oppressive nightmares, weighing alike on 
the heart, brain, and sinews of the body politic. 

The present depression is the result, first, of an overinflation of the 
currency, giving rise to extravagance, wild speculation, and unwonted 
enterprise, followed by a too sudden and too great a contraction, which 
swept away before it hopeful investments and half completed projects, 
reduced consumption, and brought on stagnation, idleness, and death. 
Not only did business and labor pass from an upright to a recumbent 
posture, but pernicious legislation put dead- weights upon them lest they 
might rise again. While thus prostrate, the money power stepped for- 
ward, and, by means of foreclosures and usurious demands, filched away 
property and destroyed the means of subsistence. If the purpose of 
what is called communism is to take from the rich and give to the poor, 
it is far more commendable than the action of those who have robbed 
the enterprising and industrious, and given their property to the already 
rich under the guise and sanction of the law. 

Having brought about this state of affairs, the leaders of the Repub- 
lican party, their pockets loaded with their share of the " divy," step for- 
ward with a cool impudence, amounting to audacity, and say to the 
people, " See how splendidly we have managed your affairs; we only 
are tit to be trusted with the care of your property." 

No matter how prosperous a people may be — however great their 
resources and productive their arts — with a metallic currency and con- 
tracted currency they are subject to periods of depression. Money is 
the sinews of commerce and industry as well as of war. Controlled by 
a few, who make it a profitable merchantable commodity, it is capricious 
and oppressive ; wheu merely coin, it is despotic ; when gold alone, it is 
a vampire sucking tbe life's blood and a ghoul devouring the dead ! 

The Republican party, to save itself from extinction, has intrenched 
itself behind this damnable gold power ; in short, sold itself to the 
devil, and it will be a blessed day when the "Old Boy" forecloses the 
mortgage. 

The National Greenback Labor party, of which I am a member, does 
not, as is falsely alleged, demand that the country shall be Hooded 
with an unlimited issue of fiat paper dollars. The hired orators, and 
scribblers of the gold bugs, from bread-and-water Beecher to Mulligan's 
man Blaine and Cross-roads Nasby, have been making merry over 
fiat. It is, however, a "bogus baby" of. their own conception. We 
recognize no such offspring. We believe in the three standards of 
money — gold, to carry on commerce with foreign nations ; silver, to 
jingle in our pockets, and legal-tender notes, for the purpose of domestic 
trade and traffic. We believe that paper money should be issued, by 
the government, and should be based on the taxation and wealth, the life, 
industry, and productiveness of the nation, and should be legal tender 
for everything within the broad borders of this great republic. This 



DEPRESSION IN LABOR AND BUSINESS. 79 

would be at once not only a gold basis, bat a silver basis, a land basis, 
a heart's blood basis. We believe its volume ought to be regulated by 
legislation to meet the wants of the people. We believe there ought to 
be no national bank but the national Treasury. We believe the gov- 
ernment should do the people's banking, and lend them money at a low 
rate of interest on the presentation of the proper securities. That it 
should use the same discrimination in doing this that banking corpora- 
tions do now. We believe that the circulation of this money could be 
so scientifically regulated as to prevent both inflation and contraction. 
We believe this to be the money of the highest civilization, and aloue 
capable of accomplishing the greatest results for humanity. We believe 
that this plan alone is the one that is to bring permanent prosperity and 
make the people.of the United States once more great, glorious, and free. 
With it, the industrious and enterprising would not be compelled to 
mortgage their lives and property to six per cent, per month as loug as 
they were able to pay it, and afterwards hand all over to the Shylocks 
to whom they mortgage themselves. 

There are four great essentials to the life and prosperity of this 
Republic. They are free education, free land, free labor, and free 
money. Degrade labor, and you depreciate the value of education. Im- 
poverish it, and you impoverish everything. The land cannot be free so 
long as the money power can put its mortgage upon it. Free money is 
the heart's blood of all enterprise. 

Some have said the present depression and consequent impoverish- 
ment is caused by overproduction ; others by overconsumption. Both 
are ridiculous. Overproduction would only make us richer, and over- 
consumption (excepting when the grass hoppers take a hand in) would 
only make us more active. Certainly it is from no natural cause. No visi- 
tation of Providence has made our fields non productive. The laud has 
not shrunk nor become sterile, nor have the seasons failed to be bounti- 
ful. Our ports as ever have been open to commerce and immigration. 
The bowels of the earth have not closed upon their treasures. The arms 
of men have not been struck with physical paralysis. There has been no 
contraction by nature or labor. The cause lies alone in the scarcity of 
money and failure of credit. Money is scarce because it has been with- 
drawn from circulation, and credit is bad because it has been overbur- 
dened and abused. Nothing has been done to assist time in restoring 
the one or the other. Hence enterprise, industry, and development 
cease. Men go idle. Their ability to earn and consume has not been 
restored. They contract new debts instead of paying off old ones. 
There is an over non consumption, and the farmer can get no remuner- 
ation for his produce nor the manufacturer for his goods. The farmer, 
instead of finding the laborer a profitable customer for his produce, 
finds him a daily burden in the form of that demoralized workman, the un- 
savory tramp. The manufacturer, instead of a consumer, finds him an 
enemy. And thus, instead of going forward, we go backward like the 
crab. And no legislation, no statesmanship has come to our aid, because 
our political servants are political hucksters, looking after the spoils and 
emoluments of office, instead of following the dictates of a wise economy. 
They have " strengthened the public credit" to be sure, and converted 
the bondholder's currency bouds into gold, and demonetized silver and 
contracted the circulation. And as the Secretary of the Treasury con- 
tracted so did the people themselves, and thus brought on this frightful 
collapse. The public credit has been strengthened at the expense of the 
private credit of the people. 

I charge our political system, or rather perversion of our system, with 



80 DEPRESSION IN LABOR AND BUSINESS 

many of our present evils. We have created a political aristocracy wit It 
the evil brood of American lawyer-politicians. We have intrusted our 
fortunes almost exclusively to his keeping. He studies ring-craft instead 
of national statesmanship. He is ever at the beck of the lobby, and sees 
in every corporation a client, in every act of legislation a profit. Instead 
of being the attorney of the people he is elected to serve, he becomes 
the attorney of schemers, public plunderers, overshadowing corporations, 
and remorseless monopolies. We are law ridden and corporation ridden. 

The Pacific coast has had its prosperity destroyed by the Central 
Pacific Railroad monopoly, the creation of Congress. It received public 
money enough alone to honestly build its road. The t*venty millions 
acres of land it received as an additional bonus, remains unsold and is 
held for speculative prices. During the past ten or eleven years it has 
been allowed to filch, according to its own showing, $132,000,000 from the 
pockets of the people for freights and fares. Instead of constructing 
its road with white labor and settling it upon its lands, it imported 
cheap Coolie labor from China, and degraded white labor to its level. 
It drove and is still driving the pre-emptors off the public lands and 
gobbling them up for themselves. No tyranny has been more grinding, 
no sway more despotic, than that of the four men who now own 
this vast property. I cite this as a sample ot what lawyer-legislation 
and Republican rule has done for the Pacific slope. The State ot Califor- 
nia, which possesses every resource under heaven, now liescrushed and 
bleeding under the wheels of this real juggernaut. 

The South lies prostrate from war, from ignorant and rapacious rule, 
and the absence of a circulating medium, with which to restore what has 
been destroyed, to renew the activities of industrial life and the devel- 
opment of her vast resources. The West has literally been "sat down 
upon " by the legislation of the money power, and her agricultural and 
laboring interests flattened out. The East is paralyzed because the 
South and West are unable to purchase her fabrics, yet we have heard 
no remedy for this but the hollow mockery of resumption ; yes, a re- 
sumption of our inactivity, our misery, and our wants. We have had 
an extra session of Congress wasted on a costly battle for party su- 
premacy and the consequent spoils of office. No extra session was 
called to provide a remedy for the depressed condition of the country — to 
lift industry up and place it again upon its feet. A wise statesmanship 
should always provide for exigencies. When the clock of our prosper- 
ity was allowed to run down nothing was done to wind it up again. 
France, our sister republic, which does not suffer nearly as much 
as her " honest money " neighbors, England and Germany, proposes to 
tide over the "hard times" by expending $800,000,000 on public works j 
and what are her demands for public works compared with ours? A 
mere bagatelle. Bat that much money spent in employing idle labor in 
a similar manner here would alone be sufficient to put the blood of 
business in active circulation, hurry up enterprise, and restore general 
prosperity. When your honorable chairman proposed in Congress a 
public loan to the poor and idle that they might settle on the waste 
lands, he only received a deaf ear. 

The administration tell us triumphantly they have paid off so many 
millions of the public debt. On the contrary, they have increased ir, 
It is now vastly greater than ever. Not in dollars by the count, to be 
sure, but in dollars by the value, for the gold dollar of today is worth 
double the gold dollar of ten years ago. I believe it will buy three 
times as much land, either farm or city. 

There is at present a lively conflict between labor and capital. The 



DEPRESSION IN LABOR AND BUSINESS. 81 

former feels it is enslaved and is endeavoring to emancipate itself. The 
balance of trade in our favor as against foreign nations, especially the 
manufacturing nations, shows a reduction of wages to an approximation 
with the European standard. It is true that to our natural products 
and superior machinery this balance is greatly due, as well as to our 
system of tariff protection. 1 believe that in this matter of tariff pro- 
tection the laborer has much to complain of. He has been egregiously 
swindled by it and remorselessly robbed. The great argument used 
by its advocates was that a high tariff would reward the American 
toiler, because it would protect him against competition with the cheap 
labor of Europe, and give him a share in the profits of his industry and 
elevate and dignify him. We see now how hollow was the pretense. 
Why, instead of this tacit agreement being carried out, the face of the 
toiler is ground, his stomach empty, his body badly clothed, his children 
in squalor, and his "dignity" gone to the Devil. On the other hand the 
manufacturer has become a baron, running great factories, presiding 
over a national bank, owning gas and railroad stock, and rolling in 
wealth generally, and as arrogant and unmindful of the poor as those 
who become suddenly rich always are. I believe in protection as I do 
in machinery, but the operative has been robbed out of his just benefits 
in both. Not only has the laborer been cheated, but also the farmer 
and general consumer. The manufacturing lords having got their high 
tariff to preclude foreign competition, lowered wages and kept up prices 
formed combinations and rings to monopolize business, thus destroying a 
healthy home competition. The farmer groans from this cause the same 
as the laborer, and the result is that his land is mortgaged beyond hope 
of redemption to the money loaner, the implement maker, and the store- 
keeper. It is only the latter that helps him, and he, too, suffers with the 
farmer and laborer. Every day capital and the labor- buyers become 
more arrogant and heartless. The selfishness of our social system has 
become such that a strong political organization of wage-workers known 
as the Socialistic Labor Party has been formed here to combat it and 
establish in the place of the selfish system a paternal or co-operative 
one. As there are representatives of that party here to speak for them- 
selves, I will not attempt to tell you what they hope to realize. They 
make the mistake, however, of assuming that currency has nothing to 
do with the welfare of labor. Might as well believe that the free circu- 
lation of blood has nothing to do with the health of the body. 

The National party of Chicago is in favor of eight hours' labor as a 
full day's work. The great surplus of labor in the market and the vast 
productiveness of machinery calls for this resettlement in favor of shorter 
hours in every branch of practical employment. 

Let me call your honorable committee's attention to the stigma that 
is sought to be put on the brows of God's good people, the laborers of 
the land, " those builders up of stores and preventers of the famine and 
the dearth," by the robber press of this city. They call " communists" 
at us every day. If they mean by this term of reproach to imply as 
would seem, that we are thieves, incendiaries, and cut-throats, they lie, 
and they know they lie. We are simply men struggling for a modicum 
of our rights as American citizens. We stand in the shadow of the Con- 
stitution. If to say with Washington, 4i the price of liberty is eternal 
vigilance," makes me a communist, I am a communist -, if with Ham- 
ilton, to believe in political rectitude and purity of public conduct, makes 
me a communist, I am one ; if with Jefferson and Theodore Parker, and 
Abraham Lincoln, to recognize this government as a " government of 
the people, by the people, for the people" is rank communism, then I 
H. Mis. 5 6 



82 DEPRESSION IN LABOR AND BUSINESS. 

am a rank communist; if with Andrew Jackson, to believe that over- 
shadowing corporations are a curse is communism, 1 believe in the doc- 
trine; if with Benjamin Franklin, to favor our citizen franchise, makes 
me a monster, I am a monster; and if with Wendell Phillips, to believe 
that the poor should be protected against the rapacity of their robbers, 
is a crime, then am I a communistic criminal ; and if with George W. 
Julian, to believe in legislation for human life as well as for bricks and 
mortar, makes me a communistic cut-throat, then am I a communistic 
cutthroat. I do not believe in violence as a remedy for the people against 
their oppressors. Disorder is the poor man's worst enemy. There may, 
however, be a limit to forbearance ; it may some time cease to be a virtue. 
But we have a potent remedy in the ballot, the crowning glory in the 
fabric of political rights. But w T e have a perfectly free ballot yet to 
contend for. Having made it as free as thought, free from surveillance, 
and doubt and dread, we must learn to unite upon it. Until we do that 
we are yet slaves. We must have a third party of free money, free 
labor, and free land. We must dispense with lawyer-legislation and cor- 
porate control ; we must have laws only that will do " the greatest good 
for the greatest number" in fact as well as in theory. In conclusion, 
gentlemen, I appeal to you in the interest of oppressed, patient, and 
down-trodden labor; labor which has given the world all its wealth; 
labor which has adorned and made fruitful the earth ; labor which 
ennobles humanity and gives potency to brain, nerve and sinew; labor 
which is the hope of the nations, .the reliance of sovereigns, the glory of 
science, the consummation of art, the handmaid of religion ; labor which 
conquers all things ; which utilizes the elements, harnesses the light- 
ning, and disarms the thunderbolt. It alone is the gospel and the sal- 
vation. 

Mr. Dickey. What do you mean by the free ballot? 

Mr. Halley. I mean that the workiugman's ballot is not now free. 
As the saying in the South was a few years ago in regard to the negroes, 
the workingman is " bulldozed." 

Mr. Dickey. Do you mean that the workingman's ballot is a market- 
able commodity, which he puts into the market and sells 1 

Mr. Halley". I believe that that is the case to some extent, but that 
is not what I mean. I mean that the workingmen are not free to go and 
deposit their ballots. 

Mr. Dickey. Do you mean that the corporations who employ them 
threaten to discharge them if they do not vote in a particular manner ? 

Mr. Halley. That is one reason ; and the other reason is that 
they are not given time to vote. I thought it a most extraordinary 
thiug, when I was iu San Francisco in 1876, to see placards posted in 
some of the largest manutacturing establishments (more especially those 
that had some of the patronage of the Federal Go vera in en t), stating 
that those employes who had the welfare of that establishment at heart 
were expected to vote the Republican ticket. The same thing has been 
done in this city. 

Mr. Dickey. Then you mean that the employment of laboring men is 
threatened, and that they are bulldozed? 

Mr. Halley. Yes, sir. 

Mr. Dickey. What do you mean by free land % 

Mr. Halley. I mean land free from mortgages. 

Mr. O'Connor. Do you propose to repudiate the mortgages ? 

Mr. Halley. No, sir. 

Mr. O'Connor. Or do you mean to have a law passed prohibiting men 
from mortgaging their land ? 



DEPRESSION IN LABOR AND BUSINESS. 83 

Mr. Halley. No. I mean that men should be so prosperous, and 
that their labors should be so remunerative, that they could pay off 
their expenses ; that there should be money enough in circulation to 
make them prosperous. I would give them an opportunity to pay off 
the debt upon their property, and to realize something. They are now 
going in debt in order to keep themselves afloat; and, in consequence of 
the present state of affairs, they have to mortgage tbeir property. 

Mr. O'Connor. You do not mean that the laud should be free for any 
body to squat upon f 

Mr. Halley. No; but I do mean that the public lauds should be 
free to pre-emptors. That is not the case now. Ten millions of acres 
of the public lands have been given to railroads, and twenty millions of 
acres of land in California are held by the great corporations on the 
Pacific coast, and men who attempt to pre-empt on that land (whether 
government land or not) are driven off. Three hundred settlers have 
been driven off land in the Tulare Valley. 

Mr. O'Connor. What do you meau by free money ? 

Mr. Halley. The money of the government. 

Mr. O'Connor. You mean free from the control of outside corpora- 
tions ? 

Mr. Halley. Yes; free from being made a merchantable commodity 
and cornered. 

I would like to make one or two remarks in reference to the labor 
question. One of the witnesses was asked yesterday whether the action 
of trades-unions was not tyrannical towards their members. I know 
that it has been frequently stated that the trades-unions are tyrannical, 
but that is a mere superficial view of the question. It would be*tanta- 
mount to saying that the laboring men have no right to combine. The 
lawyers combine, and form associations and establish rates. The phy- 
sicians do the same thing; manufacturers do the same thing; all classes 
do the same thing. Why should not laborers do the same thing % 
Here in this city we have a board of trade, which combines for the pur- 
pose of robbing both the producer and consumer, and yet no particular 
fault is found with that combination. But when the workiugoien com- 
bine to protect their own interests, they are regarded and denounced as 
communists. 

Mr. Dickey. Are there not instances where members of trades-unions 
have used force to prevent other members from working at prices for 
which they were willing to work ? 

Mr, Halley. I know of no such instance. But if a man enters into 
an agreement he is bound to stand by it. His honor and moral recti- 
tude are his guides in the matter. If a member of a trades-union re- 
fuses to stand by it, he is renounced ; that is all. We have one institu- 
tion in this city called the stock-yards, which is a very important factor 
in the trade and industries of the city. A very large number oi men 
are employed there. These men are greatly abused. They are com- 
pelled to work fifteen or sixteen hours a day in the most stifling and 
most unwholesome of atmospheres. I think that it is wrong that we. 
have not in this country such sanitary regulations as they have in Eng- 
land, not merely to regulate the hours of labor, but to regulate the 
conditions under which laborshall becarriedon. We coin plain, also, here 
of the monopoly of street railroads. Everything else has been reduced 
in price except the fare of the street railroads. The street railroad com- 
panies constitute a very great monopoly in this city. Everybody has 
to contribute to them, yet there has been no such thing as a reduction 
of fares. 



84 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Dickey. What are the rates now ? 

Mr. Halley. Five cents a ride, and it has been so all the time* 
There is another thing that I wish to refer to as a matter which I 
think would greatly tend to the dignity of labor, and would give satis- 
faction to the laboring classes of the country. That is the establish- 
ment of a labor bureau by the government. As the government looks 
after the increase of commerce and trade it ought to have the same 
regard for the life and welfare of its producing population. It is be- 
cause we are simply emerging from barbarism and have not yet thrown 
off the shackles of the barbarous ideas of the past that such a thing 
has not been provided for heretofore. We hope that it is one of the 
things that will be provided in the future. 

Ykivs of Mr. John H. Kedzie. 

Mr. John H. Kedzie came before the- committee as a volunteer wit- 
ness. He stated in response to preliminary inquiries that he has resided 
in Chicago over thirty years, that he is a real-estate owner, and that 
his occupation is mainly in taking care of what real estate he possesses. 

The Chairman. W T hat, in your judgment, has been the cause of the 
depression in the labor and industries of the country? 

Mr. Kedzie. Mr. Douglass, the manager of the Mercantile Associa- 
tion, who keeps his room in the only finished block of buildings that 
went through the fire, said to me yesterday that if he should comedown 
town to-morrow morning and find that building in ruins, and if any one 
should tell him, when he inquired as to the cause of the fire, that a boy 
had fired a pop-gun against it, he would take the liberty of disagreeing 
with him. In other words, Mr. Douglass's idea, in which I coincide, is 
that a world-wide depression, and a financial revolution that has affected 
almost every civilized country on the globe must have had an adequate 
cause. This cause I believe to have been twofold. There was what 
was called the era of indebtedness (which culminated in 1875), in which 
all the nations of the world became largely indebted. It was an era of 
expansion. The amount of indebtedness corporate, municipal, State, 
and national is set down by competent statisticians at about $32,- 
000,000,000, a sum which we can express in figures, but hardly grasp in 
our minds. This sum was independent of all private indebtedness. 
But the large amount of indebtedness was not alone a sufficient cause 
to produce the revulsion that we have witnessed, for this indebtedness 
was stimulated and encouraged largely by the corresponding expansion 
in the circulating medium of the various nations of the world, and if 
that circulating medium had remained as it was then, proportionate to 
the amount of the indebtedness of the world, and simply a check put 
upon future expansion, the world might have recovered its prosperity 
without any great revulsion. But at just about this time the demone- 
tization of silver took place throughout almost all of the civilized world. 
England, it is true, had demonetized silver in 1816, and had escaped 
the penalty of that act until about 1877 for the reason that she was the 
only' gold country in the world, and that she was surrounded by silver- 
using countries, so that she could readily unload her silver upon France 
and Germany, and did so with the utmost ease, experiencing no inconven- 
ience from the demonetizing of silver. But Germany in 1871 demonetized 
silver (which took effect practically in 1876), and then Germany, in- 
stead of beiug a recipient of English silver, became a seller of silver 
and unloaded its silver on London. At the same time France (the only 
X>rosperous country almost in the world) found it necessary to restrict 



DEPRESSION IN LABOR AND BUSINESS. 85 

iier silver coinage because she could not afford to be the dumping- 
ground for all the silver in the world, and so she shut down her gates 
on the coinage of silver. England then found that instead of unloading 
silver with such facility on her neighbors her neighbors were unloading 
theirs upon her. Then England experienced something of the hard times 
that she had been dealing out to other nations. You perceive, therefore, 
that the other cause of the depression (in addition to the inflated era 
of large debts) was the demonetization of silver almost all over the 
world. 

Mr. Dickey. What amount of money was stricken down by the de- 
monetization of silver in the world ? 

Mr. Kedzie. An incalculable amount. Almost one-half of the circula- 
ting medium of the world was destroyed by the demonetization of silver 
because silver was nearly half of the specie basis of the world, and all 
sensible men must realize the fact that the paper currency, if redeemable 
in coin, must sustain a certain fixed relation to the amount of specie. 
Xow, cutting off one-half the specie was pretty nearly equivalent to cut- 
ting off one half of the paper also, thus reducing us to nearly one-half 
of the circulating medium which we had formerly enjoyed. It is true 
that, including all our specie and paper money of every kind, we have in 
this country (not in circulation, but in existence) about 81,000,000,000 of 
money, but fully one-half of that, I believe, is locked up either in the 
Treasury or in other safe places, so that not more than one-half the 
amount (or say $500,000,000) is in actual circulation. 

The Chairman. Do you include currency and coin in that I 

Mr. Kedzie. I do. That, in brief, is my opinion of the cause of the 
hard times. The cause is twofold. The iurlation which preceded the 
panic was the preparing the train, as it were, and the demonetization of 
silver was the firing if off, and the two conbined have produced the 
revolution which we are experiencing. 

So far as Chicago is concerned I would like to correct some of the 
errors of preceding witnesses, and I have the statistics with which to do 
so. Chicago is exceptionally prosperous. That is, it is exceptional in 
regard to the rest of the country. There are several causes for its pros- 
perity which I need not dilate upon. One is our small bonded debt. 
This debt is, in round numbers, 813,400,000; but 81,510,000 of that is 
really no debt of the city at all. It is a water debt provided for by the 
water revenues, and is no burden on the city at all, so that our bonded 
debt is in reality only between eight and nine millions of dollars — a very 
smaildebt compared with other cities — and that gives us correspondingly 
light taxes, taxes much lighter than some of the wituesses imagine. 
Our rate of taxation for city and county in the past year was 3.72 per 
cent, on the assessed value of property. The city tax was 2.87, and the 
county tax 85 cents. But that tax is on a valuation which is not more 
than one-third of the actual value of the property, so that our taxes do 
not exceed (State, county, city, and every other kind) 1 per cent, on 
the actual value of the property. 

The Chairman. Yo:i are a gTeat deal better off in that respect than 
most of your neighbors. 

Mr. Kedzie. TTe are. Another error has been made as to the amount 
of back taxes. It is not nearly as much as has been supposed. The 
amount of back taxes for the county is less than 8500,000; and for the 
city (irrespective of what I shall allude to presently) 81300,000; so that 
the back taxes on property sold and forfeited, both for city and county, is 
only in the neighborhood of 81,000,000. Besides this, there are what are 
-called the taxes of 1873- 71. A large amount of the taxes for that year 



86 DEPRESSION IN LABOR AND BUSINESS. 

went unpaid on account of the authorities attempting to collect them 
under an unconstitutional law. This defect has now been remedied by 
a new law, and these taxes are being collected and will soon be paid up 
to the last dollar. They amount to less than a million of dollars now. 
They were at one time in the neighborhood of a million and a half of dol- 
lars, but they have been brought down to less than a million of dollars. 

Mr. Dickey. You assume that the property here is assessed for taxa- 
tion purpose at one-third of its actual value i 

Mr. Kedzie. Yes, sir. 

Mr. Cowgill. Is that the fact in regard to personalty as well as to 
realty ? 

Mr. Kedzie. It is, excepting that a large share of the personalty 
goes untaxed entirely. Being invisible, it is not found by the assessor. 

Mr. Cowgill. If you have $5,000 in cash when the assessor comes 
round to you, does he assess you on that amount, or does he make the 
corresponding reduction the same as he does on real estate? 

Mr. Kedzie. He makes the same proportionate reduction. If a man 
had $6,000 in cash and should honestly tell the assessor so, the assessor 
would set him down at $2,000. 

Mr. Dickey. Does the law authorize that ? 

Mr. Kedzie. Yes. 

The Chairman. Do you assess money here ? 

Mr. Kedzie. Most assuredly. 

To prove the correctness of my assertion that the demonetization of 
silver is the cause of our present financial distress, I refer you to the 
fact that financial distress prevails in every country of the world that 
has demonetized silver, and that in the only country that has not de- 
monetized silver, and that has still its full quota (France, and some of 
her dependents in the Latin Union), there is now a high degree of pros- 
perity. England demonetized silver and is now (although for a long 
time she escaped the legitimate consequences of her action by shoulder- 
ing it on to her neighbors) suffering the effects of it. Germany has 
done the same thing. The Scandinavian nations have done the same 
thing. The United States has done the same thing. And in all those 
countries they are experiencing all the symptoms of hard times, while 
France, the only country that has not demonetized silver, is enjoying 
prosperity. I therefore cannot see how to escape the conclusion that 
this folly (as I believe it to have been) of cutting off half of the specie 
resources of the country is the cause, not of the original panic (because 
a panic is easily created, and would have lasted only a few weeks if there 
had been nothing wrong in our financial condition), but of the hard 
times which we are now experiencing. 

The Chairman. What was the date of the demonetization of silver 
by Congress ? 

Mr. Kedzie. Silver was demonetized in 1873, but the fact was not 
known until 1875 -or 1876. It was demonetized at a time when silver 
coin was not in use, and the people did not know it, and members of 
Congress did not know it. 

Mr. O'Connor. Has the remonetization of silver by the Forty-fifth 
Congress had any effect in bringing about a revival from the depressed 
condition previously existing % 

Mr. Kedzie. I am glad you asked that question, because I believe 
that the remonetization of silver has assured us, at some future day at 
any rate, a bimetallic basis. The people have now confidence that that 
basis will be realized, and we hope that it will be realized in the very 
soon future. We look for it this side of the 1st of January. That be- 



DEPRESSION IN LABOR AND BUSINESS. 87 

ing the case the people have, so to speak, discounted this certainty (as 
they understand it) of a bimetallic standard, and they are beginning 
to act as if the bimetallic standard were practically established. 

As to the failures in Chicago and elsewhere. The failures iu Chicago 
for the first half of 1878 amounted to 215, and the aggregate amount of 
liabilities to about $8,753,000. The failures during the corresponding pe- 
riod of 1879 (now just expired) were only 79 instead of 215, and the aggre- 
gate liabilities were only $1,310,000 as against $8,753,000. During the 
last three months of the year 1879 the failures in Chicago were only 9, 
and the amount of liabilities only $139,000, showing a very high degree 
of commercial prosperity. I ought to say, however, that this falling off 
in the number of failures and in the amount of liabilities is partly ac- 
counted for by the fact that prior to that time all but the strong men 
had gone under, and that there has been but little material left to fail. 

In regard to real estate, the same degree of prosperity does not exist 
at all. There has been little, if any, improvement in real estate. It is 
true, I think, that the bottom has been reached, and that there will be 
no further decline $ but there is the hope of a future recovery based 
upon the hope, as I said, caused by the remonetization of silver. But 
that hope is all in the future. "We have as yet experienced none of its 
benefits to speak of. The present prices of real estate, in comparison 
with the prices that prevailed in 1873 and prior to that time, show, for 
the very choicest property, about one-third depression, so that such 
property now represents only about two-thirds of its former value. But 
the most of the property, and perhaps the average of the property in 
Chicago, is now worth not more than 50 per cent, of its former value. 
Some of it is worth less than that. Some of it is not worth more than 
25 per cent. The average of the whole, I suppose, would be about 50 
per cent. The depression in rents, so far as I can judge, is pretty uni- 
versally down to one-third of the former rates. The rents have depre- 
ciated more than the* property, because people are not willing to sell 
property as low proportionately as they are willing to rent it, and so 
rents have depreciated more than property has. They are now about 
one-third of what they were. 

The Chairman. You have no hesitation in saying that there has been 
great distress in this city for the last seven years as to its industrial 
pursuits and as to the question of labor? 

Mr. Kedzie. Xone, whatever. 

The Chairman. It was represented yesterday that Chicago had never 
been in a condition of greater prosperity. 

Mr. Kedzie. That is a very wild assertion. 

Mr. Dickey. Admitting that there is a general depression in the busi- 
ness and labor interests of the country, what remedy, if any, would you 
suggest to the committee J ? 

Mr. Kedzie. The immediate recoinage of silver equally with gold is, 
in my opinion, the principal remedy. In other words, I would have 
Congress undo the wrong which a former Congress has done. • 

Mr. Martin. Would you affect the paper currency in any way? 

Mr. Kedzie. In regard to the paper currency my views are conserva- 
tive. Congress has fixed the amount of greenbacks at $346,000,000. 
I would not ask Congress to disturb that. The national banks are free 
to enlarge their currency as the wants of trade may suggest. They 
would do it if there was a specie basis on which to act. It has been 
said by a great many that there is plenty of money now in Chicago and 
everywhere, and that money goes begging at four per cent, interest. I 
have to say in reply to that that there is plenty of money for all the 



88 DEPRESSION IN LABOR AND BUSINESS. 

uses to which money is applied, but money now is applied only in the 
most restricted and necessary operations of society. No large enter- 
prises, comparatively, are undertaken, and real estate does not move 
at all. A few days ago I said to the cashier of a bank, who told me 
that there was plenty of money, that there w r as plenty of money for 
skirmishing on the surface, for transfering wheat and pork, and those 
ephemeral articles that are produced every year, but, as to the moving 
of real estate of the country, or as to great enterprises, there was not 
anything like money sufficient to answer the demands of business. 

Mr. Martin. Then why not increase the circulation? 

Mr. Kedzie. I would do so. 

Mr. Martin. To what extent would you increase it? 

Mr. Kedzie. To the extent that there is a call for it. 

Mr. Martin. Give us your idea. Would you double the present 
volume of currency ? 

Mr. Kedzie. I think the time will arrive within the decade in which 
probably double the present amount will be required. 

Mr. Martin. You do not think that that time is now? 

Mr. Kedzie. I would not force it. I would lay the foundations for 
it, but I would not force money faster than it is called for. 

Mr. Martin. Would you make the paper currency convertible into 
coin ? 

Mr. Kedzie. Always. 

Mr. Martin. Would you have enough to float it at par % 

Mr. Kedzie. Yes. 

Mr. Martin. And no farther ? 

Mr. Kedzie. No further. I am not asking for any radical changes. 
National-bank notes are not legal tender, audi think with Mr. Sherman 
that it is just as well that they are not a legal tender when they are re- 
deemable in gold. 

Mr. Sherwin. You would increase the circulation by increasing the 
coinage of silver ? 

Mr. Kedzie. Yes; by laying broad the foundation. Then paper 
money would be issued by the banks as fast as it was needed. 

The Chairman. You would perfer leaving the amount of legal-ten- 
der notes where it now stands, at $346,000,000 ? 

Mr. Kedzie. I would prefer not to meddle with them at present, be- 
cause that is a matter of secondary importance. I consider the free 
coinage of silver as a matter of primary importance, and when that is 
carried into effect, it will perhaps give us as large a currency as we want. 

Mr. Martin. Would you have an unlimited coinage of silver? 

Mr. Kedzie. Certainly ; I would have it free to all. 

Mr. Martin. Whatever bullion is brought into the Treasury you 
would have put into money % 

Mr. Kedzie. Certainly. That was the case up to 1873, and nobody 
was injured by it. 

Mr. Sherwin. There was then the same amount of silver in the dol- 
lar as there is now, 412J grains % 

Mr. Kedzie. Yes. I believe, however, that the time will come in 
which perhaps a less amount of silver will be equal to a dollar in gold. 

Mr. O'Connor. Do you think that the production of silver is less 
than the production of gold ? 

Mr. Kedzie. No ; but we must have an international agreement fixing 
the rate of silver and gold at 15| to one. I believe that if we had free 
coinage at that rate silver would circulate. 



DEPRESSION IX LABOR AXD BUSINESS. 89 

Mr. Sheewin. You expressed the opinion that the panic was caused 
by the demonetization of silver 2 

Mr. Kedzie. No; I say that the panic was caused by the failure ot 
Jay Cooke & Co. That is what struck tbe alarm. The failure of Jay 
Cooke was the spark which set the thiug off. 

Mr. Sherwtx. Then it was not the demonetization of silver that 
caused the panic ! 

Mr. Kedzie. No, sir. The demonetization of silver caused the hard 
times which succeeded the panic. 

Mr. Sherwtx. Can you suggest auy thing in regard to taxation ? 

Mr. Kedzie. I am a strenuous advocate of low taxes. High taxes 
amount to a confiscation of the property ; and there is a good deal ot 
property in this country that is practically confiscated by taxation. The 
town of Hyde Park is nearly confiscated by high taxation ; and other 
localities are suffering quite as much. 

Mr. SnERvnx. There is considerable inequality in taxation here, is 
there ? 

Mr. Kedzie. Yes ; owing to local assessors. 

Mr. Shertyix. There is a place where laws bear heavily upon the 
poorer classes, because their property is always visible and can be taxed, 
while tbe property of the rich people often escapes taxation ? 

Mr. -Kedzie. Yes. If capital is in the form of securities that can 
be locked up, it escapes taxation ; but many of our rich men have their 
property in real estate that does not escape taxation. 

Mr. Diceey. Would a properly graduated income tax furnish any 
relief to the laboring classes 1 

Mr. Kedzie. I think we have abundant taxes already. I am in favor 
of diminishing all taxation. 

Mr. Dickey. But would not an income tax shift some of the burdens 
to where they more properly belong .' 

Mr. Kedzie. I am not in favor of an income tax for it is an odious 
tax to the American people, and it never would have been resorted to 
except in war times when patriotism got the better of our selfishness. 

Mr. Martix. If a man makes a thousand dollars a year, do you not 
think he should pay a tax upon that as well as he who pays a tax upon 
a farm that is worth a thousand dollars ? 

Mr. Kedzie. If the owner of a building gets 85,000 a year rent for 
it he pays a good round tax on the property itself, and if you were to 
tax him on his 85,000 income, you would be taxing him double. 

The ChaiR3IAX. How if a man has an income of 85,000 on bonds ? 

Mr. Kedzie. The government bonds bear so low rate of interest that 
that more than makes up for their exemption from taxation. 

Mr. Martix. A man who owns a piece of land worth a thousand 
dollars pays a tax upon it, while the man who has an income of a thou- 
sand dollars pays no tax. 

Mr. Kedzie. He has to pay a tax on the property out of which his 
income issues. 

Air. Martix. Suppose this farmer makes a thousand dollars on his 
corn and wheat : does he not pay taxes on that? 

Mr. Kedzie. He does. 

Mr. Martix. Then why not tax the man who gets a thousand dollars 
out of real estate ? 

Mr. Kedzie. The reason is, wheat and corn and the interest on in- 
vestments are the modes by which men make money. The business of 
every man is to make money. We tax the sources of the profit. That 
is, we tax the land out of which the man receives the profit, or we tax 



90 DEPRESSION IN LABOR AND BUSINESS. 

the building out of which he receives the profit, or we tax the wheat 
and the corn wbich he raises. 

The Chairman. Do you tax, in this State, the wheat and corn in the 
bin? 

Mr. Kedzie. Yes, sir. 

Mr. Sherwin. Do you know how the manufacturing business here is 1 

Mr. Kedzie. It is very much improved from what it was at the low- 
est period, but still it is not up to the standard of prosperity which it 
enjoyed prior to the revulsion. 

Mr. Sherwin. But it is better now than it has been at any time 
since? 

Mr. Kedzie. Yes, sir. 

Views of Mr. Van E. Higgins. 

Mr. Van H. Higgins came before the committee at its invitation. 
He stated, in response to preliminary questions, that he was a resident of 
the city of Chicago ; that he came to the city in 1837, and that for the 
last thirty-five years he has been a lawyer, and has been operating in 
real estate pretty largely. 

The Chairman. State generally what, in your opinion, has been the 
cause of the depression in the industries of the country, especially the 
depression of labor. 

Mr. Higgins. Hearing so many views and different opinions expressed 
here reminds me of the story of a gentleman traveling in a French dili- 
gence who inquired of a savant why white sheep had so much more 
wool than black ones. The savant told him that it was the effect of 
light upon the wool. The gentleman asked the same question of the stage- 
driver, and the stage-driver told him that it was because there were more 
white sheep than black ones. The question which you ask me is one about 
which there will be as many opinions as there are witnesses. We have 
been told that it was because of so much labor having been changed from 
its ordinary occupations during the war, and of such extraordinary ex- 
penditures having been incurred during the w T ar, and that it was because 
the people got out of the way of earning, and got to be extravagant, and 
that there was so much improvement after the war, so many unnecessary 
railroads built, and such enormous debt incurred, that the country be- 
came involved, and that it was necessary to get down to hard pan. I 
have asked myself whether that was really so, and I have tried to look at 
the conditions of the country before and after the war, and to see what 
the effect of the issuing of money and the producing of credits had upon 
the business of the country. I have looked at the statistics from time 
to time, and I have thought over the subject. After the commencement 
of the war things were more prostrated here in Chicago than they have 
been during the panic. After the panic of 1857 there was a continuous 
decline of property here so disastrous that it produced about the same 
effect or even a greater effect than the panic of 1873 has produced. In 
1860 and 1861 it was almost impossible to sell property here. Labor 
was lower than it has been during the last panic. Labor got about 75 
cents a day. Mechanics, carpenters, etc., were employed here in 1860 
and 1861 at nine shillings a day. It was only when the government com- 
menced issuing money during the war that things began to revive. As 
soon as the government commenced putting out money in 1861, business 
began to improve at once, and the places that were vacant began to be filled 
np. Landlords were able to get rents. Things got so that property could 
be sold, and about 1863 or 1864 people who were i n debt saw a way out of it. 



DEPRESSION IN LABOR AND BUSINESS. 91 

As the currency increased, business of all kinds began to revive. Manu- 
factories were started up. If you look at the statistics of the country you 
will find that in 1810 the whole value of the manufactured goods in the 
United States was $200,000,000. In 1860, one year before the war, the 
value was $1,800,000,000; so it had grown $1,600,000,000 in 50 years. 
From 1860 to 1870 the value of our manufactures increased from 
$1,800,000,000 to $4,200,000,000, (an increase of $2,400,000,000 in ten 
years, as against an increase of $1,600,000,000 in 50 years.) I attribute 
that partly to stimulating the enterprises of the county, by giving the 
people something to do it with. Formerly we had been in the habit of 
raising corn here at five and ten cents a bushel. That was the price at 
the time the war broke out. Within three years that same corn brought 
a dollar a bushel. We bad had a sort of " stump-tail" currency at the 
time of the panic in 1857, which was at five or ten per cent, discount. 
Things got no better until the government commenced to issue money; 
and after the government commenced to issue money things began to 
revive; prices went up, the price of labor went up, and there was em- 
ployment for the people. Then at home we engaged in getting up sup- 
plies for those who engaged in the war. Everybody was occupied, and 
everything went on prosperously. I have looked over the statistics, and 
I find that during eight or ten years 40,000 miles of railroad were built 
in this country; and when I look at the returns in Poor's Manual, I see 
that $500,000,000 have been paid in dividends during the past year on 
those same railroads. Not only that, but the railroads have given em- 
ployment to two hundred thousand persons, at prices higher than any- 
thing which the people thought of getting before the railways were 
built. Now, I ask myself whether it has been the building of these 
railroads that has ruined this country. I find that our foreign com- 
merce has been doubled; that the corn, grain, and cottou which we have 
been sending forward brings $650,000,000 for the year — almost 75 per cent, 
more than we had ever shipped from the country before. I ask myself 
whether that is the occasion of the country being ruined: whether 
the building of these 40,000 miles of railroads, which enables our corn 
and grain to be shipped from Kansas to the sea-board for the same 
price as it used to be shipped from Western New York, which enables 
us to lay our meat down so cheaply in Liverpool that the Englishmen 
compete with us, has ruined the country: Of our whole population of 
45,000,000, we have got 13,000,000 of a producing population — six mil- 
lions engaged in agriculture, and seven engaged in other occupations. 
The great problem is how to keep these people employed profitably. 
These people were employed profitably from 1862 to 18^3. They built 
np your cities; they opened your farms; they enabled you to increase 
your foreign exports to double what they had been, and to increase 
your manufactures from $1,800,000,000 to $4,200,000,000. I look at the 
census and see the growth of the country. I see what effect it has 
produced on immigration and on the increase of wealth (increasing it 
from probably $18,000,000,000 to $40,000,000,000, though I suppose you 
would estimate it today at $20,000,000,000 or $25,000,000,000). The 
impression which it all leaves on my mind is, that the few millions of 
dollars which we borrowed ou the other side was not the sole cause of 
our being ruined. From 1873 to 1879 (six years) this country has suf- 
fered distress just as England suffered distress when the same causes 
were in operation there. History tells us that when England determined 
on resumption of specie payments, and determined upon it to take place 
in four years, that fact dried up the sources of commerce just as an 
Arctic winter dries up the small streams, and that the result was, that 



92 DEPRESSION IN LABOR AND BUSINESS. 

there was hardly anybody in the country that was not bankrupted. 
People there found that their property was worth only one-half or one- 
third of What it was worth before. The people were driven into the 
streets, and the troops had to be called to suppress riots and insurrec- 
tion. The jails, and the poor-houses, and the alms houses were filled 
with criminals and paupers. That state of things came there just as it 
came here. We have it here to-day. I have been told by policemen 
here that they have seen respectable men go to the swill-barrels at the 
hotels to pick out pieces of bread, or something, to eat. It cannot be 
denied that there are thousands and tens of thousands of men now out 
of employment in this city. There are ten thousand laborers and me- 
chanics here who cannot get employment at any price. Things are bet- 
ter to-day. They have been improving for a year. I am glad to say 
that I think there is very little of that distress existing now ; but per- 
haps I do not know as well as some others, who say that it does exist 
to-day to a considerable extent. But to ascribe the distress which was 
brought upon this country to a cause which, in my judgment, has had 
nothing whatever to do with it, is misapprehending the condition of the 
country, and misapprehending the facts. The problem now is, how to 
keep the people profitably employed. The government must do it indi- 
rectly or it must do it directly, but how to do it is the question. From 
1861, on, there was no trouble about the employment of the people, be- 
cause the government needed the services of all the men that could be 
obtained. The people who remained at home had as much as they 
could do to supply the wants of the armies in the field, because war 
means waste and destruction; and although the war cost the countrv 
810,000,000,0000, the country is to-day $10,000,000,000 richer than if 
there had been no war. It is richer because it has developed its manu- 
factures, and has enabled its people to produce the things that they 
consume. The amount of our external commerce is a mere bagatelle 
(although $650,000,000), but the amount of our internal commerce is 
from eight to twelve thousand million dollars. The actual price paid for 
labor in this country is about 86,000,000,000 a year. Sherman boasts 
that we have a thousand millions of circulation. But how long would 
that pay the laborers of the country? Just sixty days. The problem 
is, if you have a nation of civilized people, how to employ them in such 
a way as to let them have the comforts of life, and let them be able to 
pay for those comforts. They have got to do that in interchanging labor. 
We could not buy anything abroad if we had to sell the products of our 
labor over there to pay for it. The $650,000,000 a year of our foreign 
commerce would not last us one month. If we had to buy all our cloth- 
ing, and everything that we consume, abroad, this nation would be as 
poor as Mexico. A nation has got to produce something. It is. not 
economy that makes a nation rich. If it was, then India would be the 
richest nation in the world. What would a Mexican do towards sup- 
porting a government ? He does no,t produce anything. Every subject 
of Great Britain produces 8130 a year per capita, but a native of India 
produces only $8 per capita. The secret of a country's prosperity lies 
in keeping its people employed, and you have got to have the means of 
paying them. The measure of a country's commerce is the amount paid 
to its people for labor. 

Now, when you consider that the entire property of this country is 
not equal to the product of four years' labor — that four years' labor will 
buy everything in the country — then it becomes a pretty important prob- 
lem that you keep the people at work. You have got to have money 
enough to pay them, and the more money you pay them the more prop- 



DEPRESSION IN LABOR AND BUSINESS. 93 

erty you will produce, and the more the country will be stimulated. 
Some people tell you that the great thing in a nation is to reduce ex- 
penditures and to practice economy. But how will they sell the pro- 
ducts of their labor if the people of the country are not permitted to 
consume them ? If the people have not money to buy with, how will 
those products be bought and consumed ? The rich people of the coun- 
try are so few in number that they could not buy enough to oil the ma- 
chinery. You have got to depend upon the masses for your consumers, 
and the masses must have money to buy with, and if they have no 
money to buy with you make of your mechanics and laboring men 
tramps and thieves and criminals, not from choice, but from necessity 5 
men who would be justified in having bread if they cannot have em- 
ployment. 

I have heard the question asked here, how much money we should 
have in circulation ? That depends on how much prosperity we have in 
the country. If you pay your laborers only ten cents a day, you will 
need but about one-tenth of the currency which you need if you pay your 
laborers a dollar a day, because the capacity to buy depends upon the 
amount paid for labor. All experience proves that a plethora of money 
increases the price of wages and stimulates the energies of a country. 
There never has been any great discovery of gold and silver that did not 
stimulate enterprise. There never has been a war that did not stimulate 
enterprise. The amount of money w T hich a country wants depends upon 
the number of transactions that are made in the country, and upon the 
price at which they are made. So, as I say, if you pay labor ten cents a 
day, you will require one-tenth of the amount of money in the country that 
will be required if you pay labor a dollar a day. If we were all dead in 
the United States, one dollar of circulation would be enough; but if we 
are alive and making transactions, the amount of money needed for cir- 
culation depends upon the activity of our transactions. That proposi- 
tion is as plain as the stage-driver's proposition, that there were more 
white sheep than black ones. The more transactions that are made, 
and the higher prices that are paid, the more money is required. Yoa 
were talking now about a depressed state of business and labor. If you 
want to elevate it you have got to furnish the sinews necessary to do it. 
Take a country like ours, where there is plenty of raw material and skilled 
labor, and what is necessary to make prosperity? Two things: you re- 
quire a cheap, expeditious mode of transportation, so that every pro- 
ducer can sell to every non-producer, and you have got to have a me- 
dium of exchange by which the exchanges can be effected, because 
you cannot effect them by barter, as we used to do. We do not now 
travel in ox- teams as we did then, but in a train which sweeps through 
the land at a rate of twenty or thirty miles an hour. The sort of com- 
merce that we have now has to be carried on by another agency besides 
barter. We have got to have a medium of exchange. If you want to 
fix the amount of money necessary to do business in the present day, 
you have got to see what price you do it at. We commenced here dur- 
ing the war, and got a very large amount of currency out — nearly two 
thousand millions of it, not all in currency, perhaps, but in what passed 
as currency. Seven-thirty per cent, notes, six per cent, notes, and five 
per cent, notes, passed from hand to hand as money. They were used 
as a medium of exchange, and during that time we did not get in debt. 
The great debt of this country commenced after the contraction of the 
currency. During the war the government furnished money enough to 
effect exchanges and to do business, as in Trance, for cash. Nobody 
then traded on credit. Then the consumer paid the retailer, the re- 



94 DEPKESSION IN LABOR AND BUSINESS 

tailer paid the wholesaler, the wholesaler paid the jobber, and the job- 
ber paid the manufacturer. But when the system of contraction was 
commenced, iu 1867-63, the consumer stopped paying the retailer, and 
the retailer had to get credit from the wholesaler, and the wholesaler 
from the jobber, and the jobber from the manufacturer, so that four 
notes were given for the same transaction, and that is the way that the 
debts of the country were swelled. Private credit was substituted for 
government credit. My notion is that the business of a country is bet- 
ter done when it is done more for cash and less for credit. If you have 
a moderate amount of money you can have a moderate amount of busi- 
ness in a community, because with the means of transit now a small 
amount of cash passes around a good many times. I know that it is 
said you can use checks, you can deposit money in the banks and check 
against it, and you can borrow on the bank's credit. Banks are neces- 
sary. Business cannot be carried on without them. But I think that 
a bank is a bad institution to be depended upon. Sir John Lubbock 
says that 97 per cent, of the business of England is done by checks, 
and we are asked what is the objection to that. That is a mode of do- 
ing business which iu England leads to putting the rate of interest up 
from two per cent, to five, seven, and ten per cent., so that no business 
man knows where he is. They do not suspend paying there, generally, 
but they do put the rate of interest up. Now, when the rate of inter- 
est was put up in England to ten per cent., at the time of Sir Morton 
Peto's failure, we were not disturbed by it on this side. What we want 
in this country is, first, a sound currency. There is no question, in my 
judgment, that affects the interests of the laboring classes so nearly as a 
sound currency, and there is no device that was ever invented by which 
the poor man and the laborer is cheated more than an unsound currency. 
What the laboring class wants is a currency that can be depended 
upon. You cannot make a sound currency on an unsound basis. Mr. 
Sherman said a few months ago, that every nation is obliged some- 
times to suspend specie payments. He admits that no government 
ever did, or ever can, by the laws of trade, base currency upon a 
specie basis — that is, if the holder of a note has a right to go to the 
government and demand specie for his note. With that basis there 
never will be a sound currency. What I would do would be to make a 
currency that would be legal tender, receivable for all dues, and which the 
govern ment agrees to redeem in coin, or in bonds bearing a certain rate of 
interest, so that whenever a note is presented the government will pay it 
in specie, if it has got the means, and if it has not got the means will give 
a government bond for it. With a currency like that there can be hardly 
such a thiug as fluctuation. With a currency like that the laboring 
classes would be protected. See, on the contrary, how it is with a 
fluctuating currency. Take a time like 1862 or 1863. Laboring men 
were then paid high wages. They got a few hundred dollars ahead; 
they were encouraged to buy a home. They paid two-thirds of the price 
of the lot, leaving the balance on mortgage. Then the government un- 
dertook to change its policy, and to make money dearer. It undertook 
to contract the currency, and in doing so it made it impossible for the 
poor man to pay the mortgage on his house ; and his property has been 
sold for it. We want to avoid these chances in the future. When the 
government makes a currency let it not undertake to do that which it 
may ever fail to do— and if it agrees to redeem currency in coin it will be 
sure to fail. 

In one word, the remedy for the ills that exist (to wit, the stagnation in 
business) is by stimulating the enterprise of the country with an abundance 



DEPRESSION IN LABOR AND BUSINESS. 95 

of money to do the business of the country. To-day it may be said that 
there is money enough because the business of the country is going on. 
If that is so it will regulate itself; but it is probably not so. If it is so, 
it is because the energies of the country are paralyzed. A bank is an. 
institution which makes its money by getting interest on what itoweon 
There is not a bank in this city, and probably not one in the United 
States, that can pay its officers, taxes, rent, &c, out of the interest on 
its own money. The only way a bank can make money is by getting in 
debt by getting deposits — by getting the people to put their money into 
it. These banks tempt the people with credits when money is abun- 
dant. They tempt people to engage in enterprises. Then they get 
scared and call for their money, and at once industries are paralyzed 
and stopped. That is what happened in 1873. In 1873 the manufac- 
tories were being extended, and new ones were being built, and general 
business was going on. Then the banks saw that their reserves were 
becoming short, and they became frightened and began to contract their 
discounts. The result was that the men who had been accustomed to 
get money from the banks could not get it any more, and the banks 
were so frightened that they could not take care of their depositors, and 
they suspended payments. Then the money came back again to the banks 
in a few weeks, and they were able to go on again. But as they did not 
lend anymore money the manufactories stopped. The Spragues stopped 
operations and threw twelve thousand people out of employmnnt. That 
same thing happened all over the land. Sow, that is a mode of doing 
business which I do not believe to be sound. If the business was done 
as it was done before these banks were created it would be entirely 
different. Everybody would pay as he went. The retailer would get 
his pay, the wholesaler would get his pay, the jobber would get his pay, 
and the manufacturer would get his pay. During the war it took in 
the neighborhood of $2,000,000,000 of circulation to carry on the busi- 
ness of the country, while now we have possibly $800,000,000 of circu- 
lation ; but the great bulk of it is locked up, and but a small portion 
of it is in the hands of the people. 

The Chairman. Would you restore the volume of currency to the 
amount it was during the war % 

Mr. Higgins. Every conservative man will see at once that in all mat- 
ters of finance we ought to move slowly. Although I believe that the 
national-bank charters should be ultimately repealed, I would not repeal 
them now. We could not now repeal all those bank charters and have 
them call in their loans without largely disturbing the business of the 
country. That would be a dangerous and unwise thing to do. But you 
can look to the termination of their charters as an ultimate thing. You 
might regard them as in the course of ultimate extinction, as Mr. Lin- 
coln said about slavery. Let us lop off the limbs of the tree, let us trim 
it, but not take it up by the roots at once. 

Mr. Dickey. Cannot that be accomplished by allowing the banks to 
be wound up as their charters expire? 

The Chairman. The expirations of their charters come too closely to- 
gether. They will mostly all expire in 1882. 

Mr. Higgins. Congress will think it out and determine what is best 
to be done. But sometimes by exchanging views we get ideas which, 
perhaps, would not otherwise occur to us. 

Mr. Sherwin. Is it safe to leave with Congress the determination of 
the amount of currency that the country should have ? 

Mr. Higgins. We leave with Congress the settlement of questions af- 



96 DEPRESSION IN LABOR AND BUSINESS. 

fecting our lives, liberties, and property, and if. we cannot intrust Con' 
gress with that question, it is a very strange thing. 

Mr. Sherwin. Has not experience shown that it is unsafe to trust 
Congress with the decision of the financial question ? 

Mr. Higgins. It seemed unsafe to allow Congress to contract the cur- 
rency as it has done. 

Mr. Sherwin. If Congress has acted unwisely in the matter of con- 
traction, may it not also act unwisely in increasing the circulation ? 

Mr. Higgins. It is possible to assume that all public bodies may do 
wrong. It is proper, however, to assume that they will do right ; and 
if this government is not a failure, then the method by which to deter- 
mine this question (submitting it to the sober second thought of the 
people) is a sound and safe one. To-day Congress has put its hand upon 
the coinage of silver. 

Mr. Sherwin. Has there ever been an example of any government 
issuing paper currency that did not issue it to excess 1 

Mr. Higgins. Yes, sir ; the Venetian Bank was practically a govern- 
ment institution, and yet for three or four hundred years its paper was 
always at a premium. The government scrip in New England was 
maintained at ten and twelve per cent, premium. Why? Because it 
was made receivable for taxes at par. 

Mr. Sherwin. Is it not true that the currency in Venice was exactly 
the kind of currency corresponding with our bonds ; that is, that it was 
representative of a loan to the people and bore interest ? 

Mr. Higgins. I think not. I do not understand it so. The Venetian 
notes were redeemable in coin. Our own experience proves that the ob- 
ligations of the country are of such a character that not only the 
moneyed people of this country, but the masses of the moneyed people 
of other countries, are perfectly willing to invest what they have on the 
faith and credit of this government % 

Mr. Sherwin. We find that Congress, in your opinion, has made one 
mistake when it contracted the currency 1 

Mr. Higgins. I think so. 

Mr. Sherwin. Then we may reasonably suppose that Congress may 
make a similar mistake in enlarging the currency, and is it safe to leave 
the power of contracting or increasing the currency to such a body? 

Mr. Higgins. I should much rather leave it to Congress than to the 
two thousand banks that have control of it now. 

Mr. Sherwin. The national banking law is a free banking law so that 
anybody can go into the business, is it not % 

Mr. Higgins. Yes, sir. 

Mr. Sherwin. Can you devise any better system of getting money 
to the people than our free banking system, which allows any number 
of meu having a sufficient amount of money to go into the business of 
banking ? 

Mr. Higgins. As a banking system it is the best we have ever had. 
Banking has been always a device to rob the masses and unwary, if not 
directly, indirectly. Formerly banking was done on this basis : Parties 
went to the legislature and got a charter for a bank authorizing them to 
commence the issue of notes when they made a deposit or paid in five 
or ten per cent, of the capital. They generally borrowed this five or ten 
per cent, of the capital long enough to pay it in and to make oath that 
they had done so. Then they took it out and paid it back to those from 
whom they borrowed it, and then, if they had money enough to pay the 
engraver, they went to work and issued notes and loaned them to the 
people of the country as money, taking their obligation in lieu of it. 



DEPRESSION IN LA.BOR AND BUSINESS. 9-7 

Mr. Cowgill. I desire to ask you, in the first place, if the currency 
furnished to the country by the national banks is not as good as any 
money that we have? Does it not pass as currently as Treasury notes 
or coin ? 

Mr. Higgins. I not only say yes, but I say that the national banking 
system is the best system of banking that has ever been devised. 

Mr. Cowgill. Then, admitting that national bank currency passes 
currently, and that the national banking system is the b^st ever devised, 
please to tell the committee why, if there is a demand for more curren- 
cy, it is not furnished under that system of banking ? Or, if the national 
banks are selfish and exorbitant, and if they desire to wrong the people, 
why do not you and your friends, or any number of laboring men, en- 
gage in banking and furnish a sufficient amount of currency to supply 
the demand ? 

Mr. Higgins. I do not suppose that, as business is done at this 
moment, anybody would feel like engaging in. banking business. I do 
not believe that any prudent man would embark in any business during 
the last five years. If I had had ten millions of dollars I would have 
locked it up and sat upon it. 

Mr. Cowgill. If money controls everything, and if it is so profitable 
to use and handle it, why would you not engage in business ? 

Mr. Higgins. Simply because of the course of contraction taken by 
the government. Money was getting dearer all the time and everything 
else was getting cheaper. 

Mr. Cowgill. The government has done nothing toaffect the national 
banks. 

Mr. Higgins. Naturally all the men who are engaged in banking 
understand the policy of the government. If they did not they would 
not be fit to be bank officers. No prudent man would embark in busi- 
ness during the last five years. No manufacturer would manufacture 
goods on a declining market. He would see that he was swapping off a 
rising article (money) for an article that was falling in value. 

Mr. Cowgill. But suppose they get the interest on their money? 

Mr. Higgins. How will they get the interest ? 

Mr. Cowgill. They will surely get the interest if the demands of the 
country require more money, because, the more money there is furnished 
the more business there is done, and the better able people are to pay 
their debts. That is your theory. 

Mr. Higgins. Certainly; but the trouble is that business had been 
too extended. The capacity of the people to pay their debts was 
diminished by the act of the government in making money dear and 
property and labor cheap. 

Mr. Cowgill. In what way did the government contract the cur- 
rency ? Is there not as much currency to-day as there has been at any 
time, in the strict meaning of the term currency ? 

Mr, Higgins. That depends altogether upon what you call currency. 

Mr. Cowgill. If you would call the bonded debt of the country, under 
your system, currency, why not call the present bonded debt currency? 

Mr. Higgins. In my judgment it will be so treated, and will pass from 
hand to hand before we are five years older, and there will be an infla- 
tion more rapid than there was during the war. When there comes to 
be use for money, then gentlemen who have purchased four per cent, 
bonds will be very sick of them, and if their neighbors are getting eight 
per cent, on their money these gentlemen will bring their bonds to 
market and be glad to take 90 cents on the dollar for them. 

Mr. Cowgill. I want to know what business enterprise you would 
H. Mis. 5 7 



98 DEPRESSION IN LABOR AND BUSINESS. 

have the government engage in or foster or encourage, in order to get 
these Treasury notes into circulation (because I infer that that is the 
currency which you intend to have circulated among the people) — what 
would you have the government engage in ? During the war there was 
no difficulty about that because the government at that time had to pay 
out money in large amounts for the purpose of carrying on the war. 
But now there is nothing of that kiud, and it is to be hoped that we 
shall have no such disasters as that in the near future. What now is 
your plan by which you can get money diffused among the people? 

Mr. Higgins. I would not have any very great difficulty about that. 
If Congress had not ingenuity enough to get money into circulation a 
new set of men would be elected. 

Mr. Oowgill. Do you think that it is the business of Congress to 
engage in every kind of speculation and enterprise? 

Mr. Higgins. The business of Congress is .to exercise every species of 
legitimate legislation. What is legitimate legislation is very frequently 
a problem. Some people think that the only legitimate business of Con- 
gress is to collect the revenue and to levy duties on goods. Some other 
people think that it is the duty of a government to exercise other powers. 
One class of people seems to imagine that all that the government 
is intended for is to tax people. But there are other duties of a govern- 
ment, and there are other things that Congress might perform with pro- 
priety. It is its duty to do what it can to promote the welfare of the 
peopie. In the case of a State legislature it is its duty to legislate on 
questions of education, sanitary measures, police regulations, and to 
equalize a just taxation, and to regulate all the affairs of life. The 
duties of Congress are largely denned by the Constitution. 

Mr. Cowgill. With all those duties can you not very readily point 
out something that the government can eugage in, in order to put Treas- 
ury notes in circulation ? 

Mr. Higgins. Suppose that the government paid its current expenses, 
about $3lO,000,G0O a year, and did not exact any taxes for three or four 
years, could it not theu put its Treasury notes in circulation ? 

Mr. Cowgill. I wanted to hear what your plan was. 

Mr. Higgins. I have no plan about it, but if it is desirable to do it, I 
am very confident that Congress can devise means for doing it. It might 
build railroads, might commence works of internal improvement, might 
build harbors, post offices, &c. 

Mr. O'Connor. Do you believe that the contraction of the currency 
is the cause of the wide-spread distress in the country? 

Mr. Higgins. I have no more doubt of it than I have that an Arctic 
winter dries up the streams or contracts the streams. 

Mr. O'Connor. And you think that an expansion of the volume of 
currency would necessarily bring about relief? 

Mr. Higgins. I judge of it only from the past ; I have never known 
an instance in history where a country has had an accession of currency 
that the enterprises of the country have not been stimulated. 

Mr. O'Connor. You have no doubt that Congress has a right to pass 
an act directing the Secretary of the Treasury to retire at once, by the 
issuance of legal tender money, all the bonded debt of the country that 
is now due? 

Mr. Higgins. I have no doubt of this, that whenever the government 
owes a debt it has the power (if it has the money) to pay it. Generally 
governments have taken their own mode of paying it. Justice requires 
that they should pay it according to Ihe contract. I think that it was 
a gross fraud upon the people to pay the bonds in specie, when, on their 



DEPRESSION IN LABOR AND BUSSINES. 99 

face they were payable in the currency of the country. Still I think 
that as we have now promised to pay the bonds in gold we should live 
up to that. 

Mr. Martin. As a legal proposition was not the government bound 
to pay its bonds in coin ! 

Mr. Higgins. It was not so understood when the bonds were issued. 

Mr. O'Connor. (To Mr. Cowgill.) The currency is now at par. You 
want to know how we can get the currency out, and I have asked the 
question whether it is not competent for Congress to direct the Secre- 
tary of the Treasury to pay the bonded debt of the nation, and, if neces 
sary, to issue greenbacks for the purpose of doing so. Of course the 
greenbacks would not be accepted by the holder of the bonds unless 
they are worth par, but so long as they are worth par the Secretary can 
pay up the bonded debt with them, just as it is competent for Congress 
to pass a law directing the Secretary of the Treasury to buy up 
$250,000,000 of bonds with four per cents. 

Mr. Higgins. if the bonds were not matured of course they could 
not be called in. If the bonds were matured of course Congress had a 
right to call them in, and if the government had not the means to pay 
for them it could easily get the means. The government can levy duties 
upon goods sufficient to buy all the outstanding bonds. I think it would 
be a calamity to issue a thousand millions of greenbacks at once. I 
want to avoid extremes. What is done should be done carefully and 
cautiously. What we want is permanency. 

Mr. Martin. Would you have Congress increase the currency next 
session % 

Mr. Higgtns. That is a good deal of a problem. My impression is 
that it should be understood that the policy of the government was to 
have a currency large enough per capita. Look at France and other 
countries, and see how enlightened this nation is as compared with 
those couutries. 

Mr. Martin. Would you have the same amount of currency here per 
capita as in France % 

Mr. Higgins. That is a problem which I can hardly answer. We 
would probably not require as much as they do there to have the same 
degree of prosperity. 

Mr. Martin. What amount of currency we had you would have con- 
vertible into coin % 

Mr. Higgins. I would make such paper as was issued payable in coin, 
or in government bonds at the pleasure of the government. Then the 
government never could be cornered. I look for the day when silver 
will have appreciated in -value so that it will be at a premium over gold. 

Mr. Sherwtn. How would you have the bonds payable 1 

Mr. Higgins. In coin, but at the pleasure of the government. Then 
the government never could be cornered. They should be issued as the 
English consols are issued, redeemable at the pleasure of the govern- 
ment. 

The CnAiRMAN. W T hat is the circulation of France per capita? 

Mr. Higgins. Something about $50. It fluctuates a little. That is 
a subject which I have uot even thought of in six months. There is in 
this country about $700,000,000 of circulation, but there is practically 
less than $400,000,000 in circulation as money. The probability is that 
there is not in the hands of tbe people more than four or five hundred 
millions of money. 

Mr. Cowgill. -Do you know any bank that is not willing to lend its 
money if proper security is offered for it °l 



100 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Higgins. There has not been any time since the panic that you 
can not go and borrow money from a bank if you have government 
bonds to deposit as collateral. But if you go in with business paper to 
have discounted the banks will not take it. They do not want to run 
any risks. 

Mr. Cowgill. Is not that a prudent and safe policy on the part of 
the banks % 

Mr. Higgins. I think it is; but it is very hard on the manufacturers • 
and merchants. 

Mr. Cowgill. If a man is engaged in manufacturing who is not able 
to carry it on, then he had better go into something else. 

Mr. Biggins. That is what General Jackson said in 1835. A man 
who works on borrowed capital ought to break. 

Mr. Cowgill. I do not say that by any means, but I do say that 
every bank ought to be prudent in making its discounts. 

Mr. Higgins. Yes ; if the banks are only prudent in good times. 
But everybody can borrow all that he wants in good times, but cannot 
borrow at times that people need money most. 

Mr. Martin. Do you think that the contraction of the currency is 
the only cause of the depression of interests in this country ? 

Mr. Higgins. The country, after the war, entered on a period of pros- 
perity which it had never seen before; all kinds of enterprises were un- 
dertaken: and property advanced very rapidly in value. The value of 
money, while it was increasing in regard to gold, was still diminishing 
in regard to property and labor. From 1865 to 1867 the price of gold 
was going down all the time. One problem entered into it which John 
Adams stated years ago — that a certain amount of money is necessary to 
do the business of the country, and that if you have that amount prices 
will keep regular under it, and the value of money will be uniform, and 
that in just so far as you exceed that amount you increase the price of 
other property and relatively diminish the value of money. If you dimin- 
ish the amount then you diminish the value of property correspondingly 
and even greater. Suppose that in this country to day we have $30,000,- 
000,000 of property, and $1,000,000,000 of circulation, then the least ap- 
preciation in the price of money by a reduction of the volume of currency 
makes a corresponding depreciation in the $30,000,000,000 worth of 
property and makes distress all over the land, whereas if you increase 
the amount of money by ten per cent, you add $3,000,000,000 to the 
value of the property of the couutry. 

Mr. Martin. In your opinion, is there any cause for the present depres- 
sion except the contraction of the currency ? 

Mr. Higgins. Property had been depreciating from 1867 down to 
1872. The price of the greenback at the close of the war was 60 cents 
on the dollar, but when the panic struck us in 1873 gold was at a pre- 
mium of only 9 per cent. That is to say, that the price of gold had im- 
proved 4 per cent, a year. Then gold had, only 9 per cent, to improve 
from the time of the passage of the resumption act up to the period of 
resumption. It increased about 2 per cent, a year under the resumption 
act, as against 4 per cent, a year previous to the passage of the act, 
when it was let alone, and when the property of the country was let to 
orow with it. It was only when the resumption act was passed, determin- 
ing the policy of the government to be the contraction of the currency, 
and putting it on a gold basis, that people were alarmed, and they gave 
away their property and went into bankruptcy ; and many of the banks 
themselves were obliged to suspend. 

Mr. Sherwin. How % By the contraction of the currency % 



DEPRESSION IN LABOR AND BUSINESS. 101 

Mr. Higgtns. At the close of the war there was what I regard as cur- 
rency in circulation (including everything) seventeen or eighteeu hun- 
dred millions. It passed from hand to hand as money. 

Mr. Sherwin. The securities that went to make up that amount were 
not issued as money, were they % 

Mr. Higgins. They were not a legal tender, but they passed from 
hand to. hand as money. The seven-thirties were legal-tender. 

Mr. Sherwin. Is it not a fact that those interest bearing notes were 
hoarded by the banks % 

Mr. Higgins. They were after a time. 

Mr. Sherwin. If those seven-thirty notes circulated as money, why 
should not our four per cent, bonds circulate as money also % 

Mr. Higgins. They are not so convenient; as the seven-thirty notes, 
but I think they will pass from baud to hand as a medium of exchange. 
I think they will be treated as curreucy after a time. 

The committee here took a recess till eight o'clock p. m. 

evening session. 

Views of Mr. D. E. Stieeter. 

Mr. D. R. Streeter appeared before the committee as a volunteer 
witness. He stated that he represented the council of trade and labor 
in Chicago, which comprises 27 trade unions. He presented the follow- 
ing statement of labor statistics : 

LABOR STATISTICS. 

The following labor statistics have been collected and carefully com- 
piled and classified trom blanks issued by this organization. In addi- 
tion to the large number of blanks filled out and returned to the coun- 
cil by individual workmen, reports have been received from 84 factories 
and workshops in this city. 

In presenting these statisticts, I desire to state that while I consider 
them as only comparatively correct, I believe they are as accurate aud 
reliable as the statistics gathered by the various labor bureaus now iu 
existence in this country. 
Respectfully, 

T. J. MORGAN, 

Committee on Statistics. 



Report Typographical Union of Chicago, for the year 1878. 

Average earnings per week when steadily employed: 

Union men 1 per week . . $14 00 

Non-union men per week.. 8 00 

Time lost during the year : 

Union men months . . 2 

Non-union men months . . 4 

Reduction in wages per week since 1872 : 

Union men per cent . . 40 

Non-union men per cent.. 60 

Average rent per month : 

Union men $12 00 

Non-union men 10 00 

Education expenses, including newspapers . 

Union men $-20 00 

Non-union men 12 00 

Sanitary condition of workshops : bad. 



102 DEPRESSION IN LABOR AND BUSINESS. 

Report of the cigar maker's trade in Chicago for the year ending 1878. 

Number of manufacturers 385 

Number of cigar makers 1, 400 

Average number in employment 1, 204 

Average number unemployed j 196 

Price per 1,000 from . . $300 to 14 00 

Average price per 1,000 6 00 

Average earnings per week 4 76 

Average earnings divided by the number of persons in a family (5), 

allows each person per day . . . * cents 13^ 



Wood-carvers. 

Hours of labor per week 60 

Average weekly earnings, when steadily employed $8 01^ 

Actual earnings per worker for the year 1878 $397 03 

Reduction of wages since 1872 per cent.. 44 

Lost time during the year 1878 mouths.. 3 

Average yearly earnings divided by the number of living days in the year 

(365) allows each worker per day $1 08 

This amount to a family of 5 persons allows each person per day 21| 

COST OF LIVING. 

Groceries $226 12£ 

Clothing 76 00 

Fuel 33 00 

Rent „ .... 76 50 

Recreation 20 00 

Education 9 66 

Total expenses 428 61 



Upholsterers. 

Hours of labor per week 60 

Average weekly earnings when steadily employed „. $11 40 

Actual earnings per worker for the year 1878 $452 89 

Reduction in wages since 1H72 per cent . - 35 

Lost time during the year 1878 months.. 2£ 

Average yearly earnings divided by the number of living days in the year 

(365) allows each worker per day $1 24 

This amount to a family of five persons allows each person per day . . cents.. 25 

COST OF LIVING. 

Groceries $258 50 

Clothiug . 98 88 

Fuel 39 44 

Rent 93 66 

Recreation - 1 43 

Education 16 66 



Total expenses 486 93 

Diseases iucident to the trade : catarrh and consumption. 



Silver-gilders. 

Hours of labor per week 60 

Average weekly earnings when steadily employed $9 50 

Actual earnings per worker for the 1878 $375 30 



DEPRESSION IN LABOR AND BUSINESS. 103 

Reduction in wages since 1872 percent.. . 53 

Lost time during the year 1878 months.. If 

Average yearly earnings divided by the number of living days in the year 

(365) allows each worker per day $1 02 

This amount to a family of rive persons allows each person per day 20 = 

COST OF LIVING. 

'Groceries $189 00 

Clothing 74 18 

Fuel 33 33 

Rent 59 33 

Recreation 25 33 

Education 11 00 

Total expenses 430 00 

Diseases incident to the trade : Consumption. 



Shoemakers. 

Hours of labor per week 60 

Average weekly earnings when steadily employed $9 00 

Actual earnings per worker for the year 1878 8363 33 

Reduction of wages since 1872 per cent.. 45 

Lost time during the year 1878 months.. 3^ 

Average yearly earnings divided by the number of living days in the year 

(365) allows each worker per day cents.. 99 

This amount to a family of five persons allows each person per day . . . cents . . 20 

COST OF LIVING. 

Groceries $250 91 

Clothing 45 45 

Fuel 28 33 

Rent 83 33 

Recreation 8 56 

Education 7 55 



Total expenses 409 81 

Diseases incident to the trade : Asthma and consumption. 



Cabinet- makers. 

Hours of labor per week 57 

Average weekly earnings when steadily employed 87 27 

Actual earnings per worker for the year 1878 $358 50 

Reduction of wages since 1872 per cent.. 44 

Lost time during the year 1878 weeks.. 6 

Average yearly earnings divided by the number of living days in the year 

(365) allows each worker per day cents . . 98 

This amount to a family of five persons allows each person per day ..cents. . 19 

COST OF LIVING. 

Groceries $219 00 

Clothing 60 46 

Fuel 32 86 

Rent 69 58 

Recreation 2 08 

Education 9 66 

Total expenses 397 78 

Diseases incident to the trade : Consumption. 



104 DEPRESSION IN LABOR AND BUSINESS. 

Carpenters. 

Hours of labor per week „ 60 

Average weekly earnings when steadily employed $8 70 

Actual earnings per worker for year lb78 $288 50 

Reduction of wages since 1872 per cent.. 39 

Lost time during the year 187b months.. 4 

Average yearly earnings divided by the number oi living days in the year 

(365) allows each worker per day cents.. 78 « 

This amount to a family of five persons allows each person per day.. cents.. 17f 

COST OF LIVING. 

Groceries $183 33 

Clothing 48 40 

Fuel 28 00 

Rent 48 25 

Recreation 2 00 

Total expenses -. 334 60 

Diseases incident to the trade : Not reported. 



Machinists and Blacksmiths. 

Hours of labor per week 60 

Average weekly earnings when steadily employed $12 55 

Actual earnings per worker for the year 1878 $508 62 

Reduction in wages since 1872 per cent.. 33 

Lost time during the year 1878 months.. 3f 

Average yearly earnings divided by the number of living days in the year 

(365) allows to each worker per day $1 38 

This amount to a family of five persons allows to each person per day- cents.. 32f 

COST OF LIVING. 

Groceries $206 40 

Clothing 57 00 

Fuel 30 80 

Rent 82 00 

Education 15 50 

Total expenses 541 57 



Stove molders. 

Average of family .. . . 6 

Wages per day $1 50 

Wages per year $469 50 

Reduction since 1873 per ceut. . 37f 

Average time employed months.. 8 

Hours per week 60 

Schooling per year. $8 00 

Groceries* per week 6 75 

Rent per year 96 00 

Fuel per year P 30 00 

Clothing per .year - 75 00 

Snnories (such as car fare) 25 00 

Total 590 75 

Wages per year - 469 50 

In debt at the end of the year . . : • 121 25 ■ 

Work by the piece as a general thing. Diseases most prevalent: Rheumatism by 
dampness*; consumption by the two extremities, heat and cold ; catarrh, asthma from 
dust inhaled. 



DEPRESSION IX LABOR AND BUSINESS. 105 

Harness makers. 

Hours of labor per week - 60 

Average weekly earnings when steadily employed $0 00 

Actual earniDgs per worker for the year 1878 $325 00 

Reduction iu wages since 1872 per cent. . . 3:!^ 

Lost time during the year 1878 weeks . . 20 

Average yearly earnings, divided by the number of living days in the year 

(365) allows each worker per day cents.. 89£ 

This amount to a family of five persons allows each person per day .. cents.. 1? 



Tinner v 



Hours of labor per week 60 

Average weekly earnings when steadily employed $10 33 

Actual earnings per worker lor the year 1878 $250 00 

Reduction iu wages since 1872. per cent... 50 

Lost time during the year 1878 weeks.. 26 

Average yearly earnings divided by the number of living days in the year 

(365) allows to each worker per "day cents . . 68^- 

This amount to a family of five persons allows to each person per day. cents.. 13f 



Tailor 



Hours of labor per week 60 

Average weekly earnings when steadily employed $6 00 

Actual earnings per worker for the year 1878 $312 00 

Reduction in wages since 1872 percent. .. 33* 

Lost time during the year 1878 months.. 3 

Average yearly earnings divided, by the number of living days in the year 

(365) allows each worker per day cents.. 85 

This amount to a family of five persons allows each person per day.. cents.. 17 



Horse-collar makers. 

Hours of labor per week 59 

Average weekly earnings when steadily employed $$10 21 

Actual earnings per works for the year 1878 $564 00 

Reduction in wages since 1872 per cent.. 20 

Lost time during the year 1878 weeks . . 3 

Average yearly earnings divided by the number of living days in the year 

(365) allows to each worker per day $1 54£ 

This amount, to a family of 5 persons, allows to each person per day. .cents. • 31 

COST OF LIVING. 

Groceries , $351 66 

Clothing 62 50 

Fuel 43 33 

Rent 107 00 

Education 12 50 

Total expenses 550 25 

Diseases incident to the trade: Rheumatism. 



Tanners. 

Hours of labor per week 60 

Average weekly earnings when steadily employed 69 66 

Actual earnings per worker for year 1878 $404 00 



106 DEPRESSION IN LABOR AND BUSINESS. 

Seduction of wages since 1872 per cent . . 18 

Lost time during the year 1878 weeks . . 10 

Average yearly earnings divided by the number of living days in the year 

(365) allows each worker per day $1 10 

This amount, to a family of 5 persons, allows each person per day ..cents.. 22 

COST OP LIVING. 

Groceries $344 83 

Clothing 80 00 

Fuel 29 00 

Rent , .- 66 50 

Education 15 12 

Total expenses 508 87 



Labors. 

Hours of labor per week 58 

Average weekly earnings when steadily employed $7 24 

Actual earnings per worker for the year 1878.... $273 00 

Reduction in wages since 1872 not reported.. 

Lost time during the year 1878 weeks . . 14 

Average yearly earnings divided by the number of living days in the year 

(365) allows to each worker j>er day cents.. $0 74 

This amount, to a family of 5 persons, allows to each person per day. cents.. $15 

MISCELLANEOUS COST OF LIVING. 

Groceries $209 33 

Clothing 76 00 

Fuel.... 32 66 

Rent 78 33 

Recreation 15 71 

Education ' 9 80 

Total expenses 398 85 



GENERAL AVERAGE OF ALL REPORTED EARNINGS. 

Hours of labor per week 60 

Average weekly earnings when steadily employed $8 68 

Actual earnings per worker for the year 1878 $374 78 

Reduction in wages since 1872 per cent.. 37^ 

Lost time during the year 1878 weeks.. 12£ 

Average yearly earnings divided by the number of living days in the year 

(365) allows to each worker per day $1 02 

This amount, to a family of 5 persons, allows to each person per day ..cents. 20 

Note. — This general average has been compiled from reports of standard trades that 
furnish the most constant employment and the earnings of male adults only, hence the 
high rate of earnings as compared with the report of the Massachusetts and Ohio 
Bureau of Labor Statistics. 

Massachusetts, per day $0 75 

Ohio, per day 87 

Chicago, per day 1 02 

The actual number of hours worked divided by the number of working days in the 
year (308) gives 7 hours and 33 minutes per day ; Ohio for 1878, 7 hours,' Massachusetts 
for 1875, 8 hours. 



DEPRESSION IN LABOR AND BUSINESS. 107 

GENERAL AVERAGE OF COST OF LIVING. 

Groceries $237 25 

Clothing 66 61 

Fuel 33 30 

Rent 75 27 

Recreation 10 74 

Education 11 64 

Total expenses 445 50 

Average excess of expenditures over average earnings per year $70 00 

Note. — The above statement of the cost of living divided by number of living days 
in the year (365) and also divided by the number of persons per family (5) allows each 
person per day — 

For subsistence cents.. 13 

For clothing cents . . 3| 

For fuel cents .. If 

For rent cents.. 4 

For recreation cents . . To 

For education cents . . f 

For total expenditure cents.. 23 

The above statement compared with the report of the Illinois State board for chari- 
ties for 1878 is as follows : 

Average expenditure for the board only of tbe inmates of the charitable in- 
stitutions of the State per person, per day cents.. 66f 

An excess of expenditures per person per day for board only over the expend- 
iture of the industrial population of this city for all the necessaries of life 
of cents . . 43f 

Or nearly 300 per cent., or three times as much for board as is considered sufficient to 
supply three (3) industrial producers with not only the necessaries of life, but to also 
enable them to provide against lack of employment, sickness, accidents, build up a 
home, and become rich. 

Cook County for her criminals in the county jail allows per person per day 

u for food only " cents . . 25 

An excess over the total expenditure of the industrial population of this city 
for food, shelter, clothing, and all other expenses cents . . 2 



Remarks on the condition of the various trades. 

wood carvers. 

There are cabinet-makers employed in our shops that receive not more than $3 and 
$4 for six days' hard work ; most of them have large families to support, aud their con- 
dition is most deplorable ; yet, should they quit work, plenty of others would willingly 
take their places. Boys are replacing adult labor and reducing the wages of those still 
employed. 

upholsterers. 

Wages are good in busy times (about five months in the year), but as soon as the 
rush is over the men are at the employers' mercy ; short time, discharges, and reduc- 
tions are then the order of the day. Boys are employed at from $2 to $5 per week, per- 
forming work that, if paid for at the regular rates, would cost three or four times as 
much ; these boys are always kept at work. The trade is very unhealthy, a perpetual 
cloud of dust rills the shops, causiug catarrh, consumption, and death among the work- 
ers. This could be prevented, if the almighty dollar was not of the greatest importance 
and the health and lives of the workers of no value. 

SILVER GILDERS. 

The introduction af child labor into this trade has been very injurious to the work- 
ers, in some instances displacing 50 per cent, of the adult labor. The sanitary condition 
of the workshops is a disgrace to the employers, and a sad commentary upon the in- 



108 DEPRESSION IN LABOE AND BUSINESS. 

dustrial system that holds the lives of the workers so cheap. In winter the shops are 
insufficiently warmed. In summer our work requires that all the windows shall be 
closed. No means of ventilation being provided, the shops are constantly filled with 
tainted and poisonous air, the inhaling of which produces consumption. 

SHOEMAKERS. 

In this trade, among many other evils, convict labor is the most injurious. There 
are five boot and shoe manufacturing firms in Chicago that have ceased to employ any 
but convict labor, thus forcing 250 men to seek work elsewhere, or beg, borrow, or 
steal the means of life. Failing to find euqdoyuient, these honest mechanics must be- 
come paupers or criminals, and eventually be employed either by their former masters 
or other employers of convict labor. The present convict labor system suits our em- 
ployers very well, as it gives them the advantage of getting good mechanics cheap, 
and if we (so-called) free mechanics complain about low wages, we receive the follow- 
ing consoling answer: We employers of free labor must compete with convict labor, 
and to do this successfully we must reduce wages as near as possible to the rate paid 
to the convicts. 

TANNERS. 

This trade for wages laborers has arrived at the point of evolution. Wages have 
been reduced every year, until, in some branches, tanners are compelled to work for 
six and seven dollars per week. One-third of the tanners only work two-third time, 
and either have to leave the city or linger around, Micawber-like, waiting for some- 
thing to turn up. 

TINNERS. 

At this trade the remuneration for labor is so small that it is impossible to support 
a wife and family. While a man is able to work, he can hardly make his living ; when 
disabled, there is no prospect but the poor-house. Labor-saving machinery is a benefit 
only to those who own it and get the profits. 

PLANING-MILL LUMBER SHAVERS. 

Men are employed at this laborious work at 50 cents and 75 cents per day ; and in addi- 
tion to giving so much hard work for such small pay, the men are cursed and abused by 
the foreman in a manner that would have disgraced a Southern plantation in the palmy 
days of chattel slavery. 

LABORERS. 

In this work muscle is the thing "required. In a few years we become old and our 
muscles stiff and weak. We are not able to work like young men, and hence are dis- 
charged. Not being able to save anything from our small pay, no matter how we try, 
we become paupers. This is our encouragement. But we cannot murmur at our hard 
lot, because that is wicked, and for doing so we shall go to hell, and if we are not afraid 
of hell, they have the militia to keep us quiet. 

Mr. Sherwin. I notice that these statistics all give 5 persons to]a 
family. How is it, as a matter of fact? 

Mr. Streeter. Five is usually taken by the burean of statistics as 
constituting a family. In some of the trades the numbers of persons to 
a family are returned ; in others, not. We strike an average, which is 
about 5. Five is the generally accepted number to a family everywhere. 

I am a printer, working ou the Daily News, and I have picked up a 
few advertisements which I will read to the committee, so that the com- 
mittee may see that the present depression affects all the different 
branches of labor. As the idea sought to be conveyed to the committee 
is that everything is nappy with the working classes in Chicago and its 
suburbs, I will read a little dispatch which appeared in the Chicago 
Tribune a few weeks ago. 

Mr. Streeter read the following : 

STARVED TO DEATH. 

Special dispatch to The Tribune. 

Ottawa, 111., July 19. — A case of actual starvation has come to light within the past 
few days which serves to illustrate the unhappy side of the life of a tramp. A few 
days ago one of these wanderers, giving his name as Charles Hall, applied to the author- 



DEPRESSION IN LABOR AND BUSINESS. 109 

ities of Ottawa for relief, and by them was sent to the county asylum, where lie was given 

food and treatment with the other paupers. To the warden, Webb Arnold, he said that 
he had not tasted food for nine or ten days, except a few crackers given him by a 
grocer, although he had made numerous applications at private houses for something to 
eat, to be invariably turned away. When received at the asylum he was given sufficient 
food and ate it ravenously. Shortly afterward he was taken sick, lingered a few days, 
and died ou Thursday night last. Letters upon his person indicate that he was a 
cigarmaker; that he came from either Wilmington or Zanesville, Ohio, and that his age 
was about 56 years. He had applied for work in Chicago and other cities, including Ot- 
tawa, but without success. Thus sadly ends the life of one unfortunate, unhappy 
"tramp." 

January 6. 
Situation Wanted — $10 reward will be paid to any one finding me a situation as 
bookkeeper, cashier, correspondent, &c. No. 1 references given for honesty, sobriety, 
and ability; last employed in the wholesale furniture business. Ad. G. 41, Daily 
News. 

Situation Wanted. — Who will help a young man who has neither friends or money 
in a time of need ; had 3 years' experience in office work ; rapid writer ; quick to learn ; 
reference furnished ; will someone give me a chance and pay me what tney think lam 
worth ? Ad. G. 47, Daily News. 

January 7. 
Situation Wanted— By a middle-aged man in a private family or to run a station- 
ary eugiue ; wages, board, washing, 50 cents per week. Ad. W. H. S., D. N. 

January 17. 

Wanted — A good man to take care of a horse and wagon for his board; must not be 
afraid to work; if suitable, will have a good home. 

January 20. 
Situation Wanted — By a young man ; has had 3 years' experience at carriage paint- 
ing; wages $5 per week; will do anything to make an honest living. Address L. 12, 
D.N. 

Situation Wanted — Able and willing to work at anythiug where I cau get au honest 
living to keep my family from starvation ; must have work ; can produce the best of 
reference; no objection to going into the country. Please ad. N. 7, D. N. 

Situation Wanted— By a young man as coachman or anything to make an honest 
living ; will work in city or country ; best of reference. Ad. N. 5, D. N. 

January 29. 
Situation Wanted — Will pay $10 for a situation at a reasonable salary; have had 
20 years' business experience ; reference unexceptional. Ad. for (i days, R. 48, D. N. 

February 1. 
Situation Wanted— By a married mau, 24 vears of age ; like to do anything to 
work. Ad. X. 19, D. N. ■ • 

February 19. 
Situation Wanted— Look ! I will give $25 for situation. A 1 city reference. Ad. 
T. 58, D. N. 

February 20. 
Wanted— Man to work around the house for his board. 

February 22. 

Situation Wanted — As watchman, or at anything whereby an houest man of 50 
can earn an honest living. ♦ 

And many others too numerous to mention. Must be single. 

July 29, 1879. 
Situation Wanted — I will give $25 cash for a permanent situation. Address, in 
confidence, C.28, Daily Telegraph. 

July 28. 
Situation Wanted — By an educated young man in any business; will work for 
board and clothes. Address C. 17, Daily Telegraph. 

SiTUATroN Wanted — By a widow lady; will work for board. Address C. 19, Daily 
Telegraph. 



110 DEPRESSION IN LABOR AND BUSINESS. 

The Chairman. We have now learned a good deal of detail from you. 
State to us, as a man who has knowledge on the subject, whether the 
laboring man in the city of Chicago is in a bad condition. 

Mr. Streeter. He is in a very bad condition. His condition is not 
so bad, of course, as it is in the winter time, but it is very bad at present. 

The Chairman. What proportion of the laboring men and the me- 
chanics in this city are out of employment entirely ? 

Mr. Streeter. 1 can tell you the number in my own trade, and the 
percentage is, I suppose, about the same in others. One-fifth or one- 
sixth of the men in my trade are out of employment. 

The Chairman. Do you think that that rule applies to other occupa- 
tions ? 

Mr. Streeter. It will not apply to all trades, because at this season 
of the year there are some trades brisk and others slack, but I believe 
that one-sixth of the working people of this city are out of steady em- 
ployment. 

The Chairman. How do the prices of labor correspond now with the 
prices in the last 5 or 6 years ? 

Mr. Streeter. As shown in the statistics that I have read, the re- 
duction of wages has been gradual since 1872. That was the year be- 
fore the panic. The total reduction is about 33^ per cent. In my trade 
the reduction has been a good deal more than that. Taking the non- 
union and the union printers all throughout the country, the reduction 
in the printing business has been at least 50 per cent. It has been 60 
per cent, to the non-union men and 40 per cent, to the union men. 

The Chairman. What is the general average daily pay of laborers? 

Mr Streeter. These statistics were prepared with a good deal of 
care. The reduction in the price of unskilled labor has been less than 
^m the price of skilled labor. 

The Chairman. Are you informed as to whether there has been dur- 
ing the last year any suffering ou the part of laboring men ? 

Mr. Streeter. I know from personal observation that there has been 
a good deal of suffering. Last winter people died from actual starva- 
tion in Chicago. It was stated in all the papers. 

The Chairman. Is the condition of things here improving? 

Mr. Streeter. No, sir; there is a little improvement, the same as 
there is every summer when men can sleep out of doors, and can man- 
age to exist on what they can get to eat. In winter time they huddle 
into police-stations, while in summer time they stay outside. 

The Chairman. Have you had any strikes here recently % 

Mr. Streeter. Yes; the furniture workers had a strike, and the 
printers had a lockout four or five weeks ago. 

The Chairman. What was the result of the strike ? 

Mr. Streeter. The result of the 8-hour strike was that the men went 
to work. As I understand it the objection of the employers was, not to 
the men working eight hours a day, but because they could not com- 
pete with other 'factories where the men were workiug 10 hours a day 
and so the men went back to work. 

The Chairman. What is the general comparative condition of health 
in this city as between the laboring population and tne non-laboring 
population % 

Mr. Streeter. I have never paid any particular attention to that: 

but, judging from the outside of the houses where workiug people live, 

from the inside of the workshops and the printing offices where 

they work, I should think that the workiug classes w r ould be a great 

deal more unhealthy than the non-working classes, because no attention 



DEPRESSION IX LABOR AND BUSINESS. Ill 

is paid to the ventilation of the workshops in this city, and some of 
the printing offices in this city are simply horrible. 

The Chairman. What is the general rent of a tenement of two or 
three rooms ? 

Mr. Streeter. I cannot state, as I am boarding myself. 

The Chairman. Do yon see any permanent improvement at present 
in the condition of the laboring classes, as compared with 5 or 0' years 
ago? 

Mr. Streeter. No, sir; I do not see anything of the kind. I noticed 
that some of the gentlemen here yesterday stated their opinion that 
there was an improvement in business. There may have been an im- 
provement with them, and there may be more money in the banks, but 
we have none of it. 

Mr. Martin. Do you not believe that the improvement of labor- 
saving machinery is a great injury to the laboring people ? 

Mr. Streeter. I do, most assuredly. 

Mr. Martin. Mr. Sloan stated yesterday that their condition was 
much benefited by improved machinery. 

Mr. Streeter. I thiuk he is entirely mistaken. From the observa- 
tion that I have given to the subject, and from the different authorities 
that I have read in respect to it, I am pretty well satisfied that labor- 
saving machinery is an injury to the workingmen, and I think that 
that proposition is easy of demonstration. I understood the other day 
that a machine has been invented in Philadelphia that will do the work 
of 20 or 25 printers. 

Mr. Martin. Does not the improvement of machinery in your line of 
busiuess throw a good many printers out of employment i 

Mr. Streeter. So far as I understand it, the question is whether, 
if it throws 25 printers out of employment, it will not employ 25 other 
men in building the machinery ; but after getting the machinery built 
it will not take more than one mau to each machine. 

Mr. Martin. What it takes 25 men to do now would be done by one 
man with this machiue? 

Mr. Streeter. Yes, sir; if the machine be a success. 

Mr. Martin. What is the cause of the state of things that you have 
detailed to us, and what is the remedy for it J ? 

Mr. Streeter. In the first place, I believe that the cause is the 
heartlessness of the aristocratic American people — their ignorance and 
heartlessness. They do not give half the attention to the working peo- 
ple in this country that they give to the heathen in foreign lands. That 
is one of the chief causes. 

Mr. Martin. Your idea is that the cause is neglect of the laboring 
men ? 

Mr. Streeter. Yes; on the part of those who could make it much 
easier for the laboring classes. The newspapers are simply in the in- 
terest of one class ot people — those who buy them for their advertise- 
ments. I lay the blame in the first place to the newspapers and to the 
aristocratic classes in this country. 

Mr. Martin. What is your remedy? 

Mr. Streeter. I have got several remedies. I have got a list of rem- 
edies prepared by the labor committee. 

Mr. Cow&ill. I understand you to say that the average reduction 
in the price of labor since 1872 is about 33^ per cent. ? 

Mr. Streeter. Y^es, sir. 

Mr. Cowgtll. What reduction, if any, has there been during that 
time in the price of the necessaries of lite % 



112 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Streeter. I figured it up in my own business, and there lias 
been, I suppose, a reduction of probably 3 or 4 dollars a week in the 
cost of living. 

Mr. Cowgill. What is the percentage ? 

Mr. Streeter. I think about 20 or 25 per cent. 

Mr. Martin. Is the reduction in the cost of living equal to the re- 
duction in the price of labor ? 

Mr. Streeter. No, sir. Take the Chicago Tribune, the Inter Ocean, 
or any of these papers. The men work seven days a week on those pa 
pers. They used to pay 55 cents a thousand ems, which would be for a 
night's work (supposing a man to set up nine or ten thousand ems) 
about five and a half dollars a night. Now a man gets 36 cents a thou- 
sand ems, which (supposing him to set nine or ten thousand ems) is 
about $3.50 a night. So that there is a difference of $14 a week in the 
seven days' work. 

Mr. Sherwin. What would you do with the machine competing with 
you? 

Mr. Streeter. That is a pretty hard question to answer. I see no 
way out of the difficulty unless the machine be made to benefit the 
man who works for a living, instead of benefiting altogether the man who 
does not work for a living. 

Mr. Sherwin. You are not against machinery per se ? 

Mr. Streeter. Not all. 

Mr. Sherwin. How would you manage so as not to have it compete 
with labor ? 

Mr. Streeter. I think that the machinery ought to be owned by the 
government and run by the government. I believe that the post-office 
system and the public-school system should be applied to machinery. 

Mr. Sherwin. To all kiuds of machinery ? 

Mr. Streeter. To nearly all kinds. 

Mr. Sherwin. Would you apply it to railroads ? 

Mr. Streeter. I would certainly apply it to railroads first of all. 

Mr. Sherwin. Would you apply it to steamboat lines ? 

Mr. Streeter. Yes. 

Mr. Sherwin. And to printing presses? 

Mr. Streeter. No ; I do not think I would have it apply to print- 
ing presses. 

Mr. Sherwin. Then that remedy would not relieve the printers ? 

Mr. Streeter. Machinery has never bothered the priuters so far. 
The first intimation I ever had of any machinery to interfere with the 
printers is this machine in Philadelphia that I heard of. So far as ma- 
chinery is concerned we have had none in our business. 

Mr. Sherwin. How would you do with the improvements in farming 
machinery ? 

Mr. Streeter. I can see no possible way of circumventing machin- 
ery unless the benefit of machinery goes to the man whom it supplants. 

Mr. Sherwin. How would it go to the man whom it supplants in 
farming? About half of the laboring men of the country are farmers. 

Mr. Streeter. It would go to them simply by the government own- 
ing the machinery. 

Mr. Sherwin. Owning the machinery that is used on the farm? 

Mr. Streeter. Y"es, sir. 

Mr. Sherwin. In other words the government would be a grand ma- 
chine itself and would employ and pay all the laborers? 

Mr. Streeter. Yes. 

Mr. Sherwin. The government then should be a commune? 



DEPRESSION IX LABOR AND BUSINESS. 113 

Mr. Streeter. Yes. You have asked me these questions, and 1 am 
bound to answer them, but these are not the ideas, by any means, of 
the body that I represent. The body that 1 represent is simply a trades- 
union, and a very great many of its members have no such ideas. 

Mr. Sherwin. But that idea prevails a good deal, does it not? 

Mr. Streeter. It does to a certain extent ; and it is growing. 

Mr. Sherwin. If the government did own and operate the machinery, 
there would be still the same number of laborers unemployed as now % 

Mr. Streeter. Yes. 

Mr. Sherwin. How would you furnish them work ? How do you 
think the government could employ this unemployed labor ? 

Mr. Streeter. Simply by owning the machinery and taking the re- 
sults of the work, and paying the profits of the work to the employes. 
Instead of laborers getting, as they do now, -J of the results of their 
work, they would get 4. 

Mr. Sherwin. The government would own the products 1 

Mr. Streeter. Yes ; the government would be pretty much of a com- 
mune. 

Mr. Sherwin. That would destroy competition entirely ? 

Mr. Streeter. Yes ; it would do tiway with a great many of the evils 
that we suffer under. 

Mr. Sherwin. And do von think that that is the only way out of the 
difficulty 1 

Mr. Streeter. That is the only way I see out of it. 

Mr. Sherwin. I think you must have done a good deal to do in getting 
up these strikes 1 

Mr. Streeter. I have devoted a good deal of attention and care to 
them. 

Mr. Sherwin. You spoke in your statistics of the total earnings of 
wage-workers for 1878. Do you mean by that the earnings of the men 
actually employed ? 

Mr. Streeter. Yes. We add up all these things together, and di- 
vide them in order to get the percentage. 

Mr. Sherwin. Or do you mean the members of the trades- union % 

Mr. Streeter. I mean the members of the trades-union. 

Mr. Sherwin. Some of them do not get any work at all. 

Mr. Streeter. .None of them are out of work the whole year. First 
we add up the total number of days' work for the whole craft, and the 
amount received. 

Mr. Sherwin. How many men are there usually in a trades-union ? 
Take the harness-makers, for instance. 

Mr. Streeter. I cannot give you any information in regard to num- 
bers outside of my own union. 

Mr. Sherwin. There must be among the harness-makers 100 men who 
get hardly any work at all. That would bring down, of course, the aver- 
age pay. 

Mr. Streeter. That is hardly a supposable case. 

Mr. Sherwin. Whatever number there is unemployed serves to bring 
down the average J ? 

Mr. Streeter. Yes. 

Mr. Sherwin. I have figured it up, and I find that if a laborer is 
employed the full time he will have 28 cents a day for his family more 
than you give him in these statistics. If that is so the wages would be 
of course materially benefited, and the real want would be, after all, 
want of employment more than a deficiency of wages. 

Mr. Streeter. In the majority of these trades-unions the men out of 
H. Mis. 5- — 8 



114 DEPRESSION IN LABOR AND BUSINESS. 

employment are supported directly by those who are in employment. 
That is our reason and justification for taking and adding up the wages 
of all the laborers in the trades-union and dividing them among all. 

Mr. Sherwin. In your statistics do you count the expenses of those 
who are out of employment * 

Mr. Streeter. Yes ; we count the expenses of all of them. 

Mr. Sherwin. Can you, as an individual, suggest any plan by which 
Congress can give relief by legislation % 

Mr. Streeter. Yes ; I have got it right here, It would require a 
constitutional amendment for some of the suggestions, but still you ask 
us for measures of relief, and we give them. 

Mr. Sherwin. You admit that Congress has no power to give this 
relief? 

Mr. Streeter. In regard to some of the measures Congress has power. 
"We got up this plan with the idea that Congress would originate the 
necessary amendments. Our plan is this : 

1. Eight hours as the legal working-day, and prompt punishment for 
all violations. 

2. Compulsory education of all children under fourteen years of age. 
All materials, books, &c, necessary in the public schools, to be furnished 
free of charge. 

3. Loans to poor persons desiring to avail themselves of the benefits 
of the homestead law. 

4. Some national plan by which wages can be collected before all other 
obligations. 

5. A national bureau of labor statistics. 

6. Prohibition of the use of prison labor by private employers or cor- 
porations. 

7. All indirect taxation to be abolished, and a graded income-tax to 
be collected in its stead. 

8. Prohibition of the employment of children under fourteen years of 
age in industrial establishments. 

9. All conspiracy laws operating against the right of workingmen to 
strike, or to induce others to strike, shall be repealed. 

10. Sanitary inspection of all conditions of labor (means of subsist- 
ence and dwellings included.) 

11. Strict laws m diking employers liable for all accidents resulting, 
through their negligence, to the injury of their employes. 

12. The right of suffrage shall in nowise be abridged. 

13. National election days to be holidays, with severe penalties for 
violation. 

14. Fine or imprisonment, or both, to be inflicted on employers for 
intimidation of workmen in exercise of elective franchise. 

Views of Mr. P. H. McLogan. 

Mr. P. H. McLogan appeared before the committee as a volunteer 
witness, and stated that he was a printer by trade. 

The Chairman. State in a general way the condition of the printing 
business. 

Mr. McLogan. The condition of the printing trade is worse than it 
has been at any time since 1872. - There have been four or five reduc- 
tions in the rate of pay, and we now earn within 50 per cent, of what 
we did in 1872. 

The Chairman. How do you explain the falling off in the wages of 
printers % 



DEPRESSION IN LABOR AND BUSINESS. 115 

Mr. McLoaAN. There are too many persons to do the work, and, there- 
fore, we think that the reduction of the hours of labor would be a rem- 
edy. We are working now on morning newspapers from twelve to four- 
teen hours a day, and on evening newspapers perhaps ten hours a day, 
and we think that a reduction of the hours of labor to eight (one-fifth of 
the members of the trade being out of employment) would equalize it, 
and that then all would be able to find work. That is one remedy. Al- 
though the United States have now, I believe, on the statute-book an 
eight-hour law to be enforced in all the government establishments, still, 
as we understand it, it is not enforced, and we think that the govern- 
ment ought to set an example to the States and cities by enforcing its 
own laws. 

The Chairman. Would you have the employer pay the same amount 
of wages for eight hours' work as for ten hours' work f 

Mr. McLogan. I would say as an individual (and I think it is the 
general sentiment of the advocates of the eight-hour law)' that we are 
willing to accept eight hours' pay for eight hours' work. We are willing 
to submit to the reduction of pay for the general good. 

The Chairman. Have you any other idea to suggest with reference 
to measures of relief % 

Mr. McLogan. Yes ; I think that the prison contract system ought to 
be abolished. It is fruitful of evil in every direction. Men are sent 
here by the hundreds every year to go to State prison, and there they 
are taught trades, and they come out and compete with honest mechanics. 
The trades are not diversified in the prison, but there are probably three or 
four hundred engaged at one particular branch of business. They work 
at cheap rates, and the goods which they manufacture are shipped to 
Chicago to compete with the goods manufactured by mechanics here. 
The result is that mechanics have to work at starvation wages. This 
system is putting a premium on crime. 

The Chairman. What is the difference between State's prison labor 
and free labor ! 

Mr. McLogan. The difference is that in the State prison the laborer 
is clothed, housed, and fed at the expense of the State, and they have 
the finest machinery aud abundant capital, so that they are able to turn 
out goods in a better shape than private individuals or firms can do. 
The result is that the market adjacent to the State's prison is over- 
stocked. 

The Chairman. What I had in view was to get at the difference be- 
tween the prices paid to State's prison convicts and to free men % 

Mr. McLogan. The contractor pays from IS to 23 cents a day for 
prison labor in some States, and 40 cents a day in this State. 

The Chairman. Could a free man live at that rate of wages, and sup- 
port his family % 

Mr. McLogan. A mechanic outside of the prison who has to rent a house 
and to support his family cannot possibly compete with a person in a 
State institution who is fed and clothed there. 

The Chairman. Are there many State-prison convicts employed in 
this city % 

Mr. McLogan. Quite a number of them, when they come out of Joliet, 
come here and seek employment in the trade which they have learned 
at Joliet. 

The Chairman. What work are the prisoners generallv engaged in 
there % 

Mr. McLogan. In cigar-making, and in cooperage. They have flooded 
the market in Indiana, Illinois, and Ohio to such an extent that the 



116 DEPRESSION IN LABOR AND BUSINESS. 

cooperage business of these States is at starvation wages. In Jackson 
penitentiary, Michigan, they make a pair of shoes for 15 cents. 

The Chairman. Is labor in a more depressed condition now than it 
has been at any time within the last ten years? 

Mr. McLogan. I think that during the year 1879 it is more depressed 
than it has been since the panic. There are less men employed and a 
less rate of wages paid. 
The Chairman. Can you give us any reason why that is so ? 

Mr. McLogan. The market is overstocked with labor, and I believe 
that the progress of labor-saving machinery within the last 20 years has 
helped to produce that result. Machinery has been improved to such 
an extent that a man is able now to do as much work in one day as 20 
men could do 20 years ago without labor-saving machinery. 

The Chairman. Is not the effect of labor-saving machinery felt more 
in agriculture than in any other occupation? 

Mr. McLogan. Yes ; and the improvement of agricultural machinery 
has also affected the large cities, because thousands of men living in the 
cities had been in the habit every season of going into the country 
and seeking harvest work. That system is now almost effectually de- 
stroyed by labor-saving machines ; and, from the comments of the news- 
papers on tramps, men are afraid to go into the country lest they will be 
arrested as vagrants or shot down. Any person has only to walk along 
the streets of our town to see hundreds, if not thousands, of idle men. 

Mr. Sherwin. Do you not think that more assaults are made by 
tramps on the people than there are by the people on tramps I 

Mr. McLogan. I cannot say that there are. 

Mr. Sherwin. Did you ever see a tramp shot down who was not a 
criminal ? 

Mr. McLogan. I never saw it, but I read of it. I have read about in- 
nocent men who went seeking work being shot down. 

Mr. Sherwin. Have you read week alter week of the assaults com- 
mitted by tramps on farmers' wives ? 

Mr. McLogan. I have. 

The Chairman. When did you first hear of the word tramp % 

Mr. McLogan. I used to hear of English tramps tramping from town 
to town. 

The Chairman. That was the case of journeymen seeking work ; but 
when did you hear the word tramp applied to laborers seeking work % 

Mr. McLogan. Never before 1872. 

^Che Chairman. State whether in your judgment the great majority of 
these people who are called tramps are not men who have been driven 
from their homes by necessity. 

Mr. McLogan. I believe it firmly. 

The Chairman. From want of employment % 

Mr. McLogan. Yes. 

The Chairman. And do you not believe that the crimes committed by 
them have been the result of idleness which they could not prevent? 

Mr. McLogan. Yes ; I also believe that. The organization which I 
in part represent is very much in favor of a homestead law, and be- 
lieves that if the Government of the United States has a rigkt to subsi- 
dize railroad companies and steamboat lines, it has the same right, and 
it is its duty, to help poor men to get on farms, and not only to put them 
on farms but to provide them with labor-saving machinery and things 
of that character, and to take a lien on their farms for the repayment of 
the sum advanced. 

The Chairman. Do you believe it is as much a deed of charity to help 



DEPRESSION IN LABOR AND BUSINESS. 117 

a man by colonization, or by small advances to him when he gets on the 
land, as it is to give him the land ! 

Mr. McLogan. It is. It is useless to give him the land unless he has 
money to cultivate it. 

The Chairman. Is there anything more unjust in the one than in the 
other % 

Mr. Mc Logan. No, sir. It is useless to give a man land unless you 
give him the means to go upon it and cultivate it. Every day we hear 
the question asked, why not go west and go on a farm? Men cannot go 
west and get on farms if they have nothing to live upon, and nothing to 
put in crops with. 

Mr. Cowg-ill. Let me ask you whether you know anything in regard 
to the habits of tramps in regard to their willingness to perform labor. 
Have you any actual observation or experience of the kind, or do you 
only speak from hearsay ! 

Mr. McLogan. I have conversed with people who called themselves 
tramps. 

Mr. Cowgill. From your own observation or experience do you 
know anything about the habits of tramps, or about their inclination to 
labor, or to seek honest employment? 

Mr. McLogan. Not of my own knowledge, 

Mr. Cowgill. Then all that you know about it you have acquired by 
hearsay ? 

Mr. McLogan. Certainly, from information. 

Mr. Cowgill. You do not know whether the class of men who tramp 
through the country from house to house and from town to town \yould 
labor if they could have employment ? 

Mr. McLogan. Not of my own knowledge. 

Mr. Cowgill. How do you know whether half of these men, where 
they come into a farmers house and ask for something to eat, or for 
clothes, or shoes, or a hat, or something of the kind, are willing to hoe a 
little bit of garden, or to saw a little bit of wood, while the lady is cook- 
ing a breakfast for them ; or whether they would not prefer to go off 
hungry rather than go into the woodhouse or garden to do some work? 

Mr. McLogan. I do not know anything about that. 

Mr. Martin. Does a depression of labor exist among the unskilled 
laborers 1 

Mr. McLogan. Yes ; both among the skilled and unskilled laborers. 

Mr. Martin. To what extent does the depression exist among the 
unskilled laborers? 

Mr. McLogan. I think it exists to as great an extent among the un- 
skilled laborers as among the skilled laborers. My reason for judging 
so is that we have the laborers union represented in our trades council, 
and we get their views. I think that depression exists among them to 
fully as great an extent as among skilled laborers. 

Mr. Martin. How many unskilled laborers are now unemployed in 
this city J ? 

Mr. McLogan. I should judge that about four thousand are unem- 
ployed, or are only partially employed for a day or two in the month. 

Mr. Martin. Is it your opiuion that they are unemployed because 
they cannot get work, or because they will not work ? 

Mr. McLogan. My opinion is that they are unemployed because they 
are unable to get employment. 

Mr. Martin. Do you think that the question of currency has had any- 
thing to do with the^matter % 

Mr. McLogan. The question of currency is one in which we differ in the 



118 DEPRESSION IN LABOR AND BUSINESS. 

trades council. My individual opinion is that the question of currency 
has considerable to do with it. 

Mr. Martin. Do you think that the people would be better off with 
the currency inflated ? 

Mr. McLogan. I think so. 

Mr. Martin. Then you think that the contraction of the currency had 
something to do with bringing about the present state of things. 

Mr.McLoGAN. In fact, I almost know that it had. 

Mr. Sherwin. Admitting that the government has a right, and ought, 
to assist laboring men to go on farms, state whether you do not think 
that it would be better for the laboring men, and just as cheap for the 
government, to expend the same amount of money in purchasing little 
homes for them in the suburbs of a city, or purchasing lots and letting 
them build their own houses. 

Mr. McLoGAN. It would not be as effectual, for this reason, that buy- 
ing a laborer a house and lot in the city would not give him any more 
work to do. 

Mr. Sherwin. But the government might buy him a garden plat? 

Mr. McLoGrAN. In such a city as Chicago the government would have 
to pay a thousand dollars for a building lot with a plat large enough to 
allow a man to plant a few heads of cabbage. 

Mr. Sherwin. But the government could do that with the same pro- 
priety, could it not I 

Mr. McLoGrAN. Certainly. The fact has been that the few mechanics 
here who went to work and invested their savings in small houses and 
lots just before the panic paid extravagant rates out in the suburbs ; the 
result was that the panic came along, and the depression, and the prop- 
erty was reduced 50 or GO per cent, in value. 

Vieics of Mr. C. McAuliffe. 

Mr. C. McAuliffe appeared before the committee as a volunteer wit- 
ness. 

The Chairman. What trade do you represent ? 

Mr. McAuliffe. I am here as one of the representatives of the tan- 
ners, and shoemakers, and horse-collar makers, and clothing workers 
I belong myself to the printing trade ; I work for the Daily News. I. 
would like to make a short statement from notes that I have got. I 
call attention to the fact that for a long time there has been in this 
world a class known as the conservative class, attempting to retard the 
world's progress. The best representative of that class in America is 
the newspaper press. The newspapers have done all they could to throt- 
tle the movement for the emancipation of the laboring man; they lie 
every day, and when you send in a communication and show the fallacy 
of their arguments they vilify you. 

. The Chairman. How is it when they want the workingman to go 
into the army? 

Mr. McAuliffe. O, then they are very friendly to him. I wish now 
to speak of the eight-hour law. As the eight-hour law now stands it 
applies only to men working for the government ; but I believe that 
Congress has the power to make it apply to the whole country. Section 
8, article 3, of the Constitution of the United States says that Congress 
shall have power to regulate trade with foreign countries, &c, and the 
next section throws open the ports of every State to the commerce of 
every other State. Now, if one State should go to work, as it has got a 
a right to dp, and shorten the hours of labor so that all its working 



DEPRESSION IN LABOR AND BUSINESS. 119 

people may have work, that State would become a prey to all the other 
States of the Union, because all the other States making their laborers 
work for longer time, would be able to produce goods cheaper, and 
would take away the market from the State that adopted the eight-hour 
rule. I hold that every State has the right to shorten the hours of labor, 
and to call upon the other States to do likewise. If one State keeps 
laborers working in its cotton mills eleven hours a day, and another State 
only ten hours a day, the latter State has a right to call upon Congress, 
and I think that Congress has a right to take action in the matter. 
Another thing that 1 wish to insist upon is the compulsory education 
of children under 14 years of age. 

The Chairman. Would you have the general government atteud to 
that matter? 

Mr. McAuliffe. Yes. 

Mr. Martin. You would have Congress pass a general law applicable 
to all the States? 

Mr. McAuliffe. Yes. It is a general principle over all the civilized 
word that no government can take private property without compensa- 
tion ; but yet that is done in the State of Illinois every day in the week. 
It has been stated by an eminent man that a profession is property. If 
a profession is property then a trade is also property ; and yet the State 
of Illinois goes into competition with honest tradesmen, teaches trades 
to the convicts in the State prisons, and as a matter of course takes 
away from me my trade, which is my property. 

The Chairman. You put that on the same footing as the rule that a 
government shall not take private property for public purposes without 
compensation ? 

Mr. McAuliffe. Yes; and my trade is my private property. It is 
also claimed that the government cannot come in and assist the poorer 
classes by reducing the hours of labor. Now, it is only within the last 
fifty years that this let-alone policy came into practice. In English his- 
tory in every case where the workman has been attempting to get 
decent wages Parliament has stepped in and said that he shall not do 
it. This divine right of private contract does not exist in everything 
after all. Common carriers can contract, and yet nobody supposes that 
the man who employs a common carrier cannot defend himself from the 
injustice of the common carriers just as the ordinary w r orkingman can 
defend himself from the injustice of his rich employer. I do not think 
that a starving workingman has much freedom of contract in hiring out 
his labor to a Scott or a Yanderbilt. We need laws to put a stop to 
overtowering corporations. People are continually talking about what 
the workingmen will do to pull down the government, but I want to 
state to this committee that if anything ever did help to pull down the 
government it would '"be bribery and corruption; and these overpower- 
ing corporations have now got it so that they can shake the Uniten 
States Government at their very will, and men fall bribed and rotten. 
A third point is that national election days are to be public holidays. 
The necessity for that every one working for wages knows. If the 
politics of the workingmen do not suit the employer he is always in an 
exceedingly great hurry that day, and the workingmen cannot possibly 
go out to vote. For that reason we do not vote at all. 

The Chairman. Y r ou ought to go a step farther, and prohibit the work- 
ingman from working on a national election day. 

Mr. McAuliffe. That would take in not only the employer but the 
employed. Pine or imprisonment, or both, should be inflicted on an 
employer for intimidation of workingmen in the exercise of the elect- 



120 DEPRESSION IN LABOR AND BUSINESS. 

ive franchise. Such intimidation is practiced in Chicago at every elec- 
tion. In the last election here for members of the legislature one of the 
street railroad companies gave it to be understood to their employes 
that if they did not vote the ticket which the employers favored the 
workingmen would work no more for them. 

The Chairman. Do you know that to be a fact from personal obser- 
vation, or only from hearsay ? 

Mr. McAtjliffe. I have such evidence of it as is undeniable. Even 
the Eepublicau party organs, in whose favor it was done, do not deny 
it. The Tribune does not deny it ; nor does the Inter Ocean deny it. 
The matter was brought up before the Illinois legislature, but the legisla- 
ture being rotten to the core would not investigate it. In that case it 
was not the negro who was intimidated, but the free workingman. 

The Chairman. Do Democratic employers do that as well as Repub- 
lican employers *? 

Mr. McAtjliffe. Undoubtedly. I merely give that as an example, 
because it is done by the ''God and Morality party," and of course if it 
is done by that party it will be done by the other party. 

There has been something said about machinery, and on that point 
I desire to state the views of the body of men whom I was sent here to 
represent. These views are, that although machinery has been, up to 
the present time, in some respects a blessing, yet comparatively it has 
been a curse. If there was only a hundred dollars in the world, and if 
one man had 99 dollars of that he would be a terrible millionaire, and 
would lord it over all the rest of creation. At one time, before the in- 
troduction of machinery, fortunes were not so large as they are now, 
and yet workingmen were just as rich as they are now, and to some 
extent richer. Of course the comforts of the workingman have un- 
doubtedly increased, especially if he is in employment, but his comforts 
have not increased in proportion to the increase in the wealth of the 
country. So that although he gets a positive increase of happiness in 
consequence of machinery, yet comparatively machinery is a curse to 
him, because he sees men so much richer than he. In that way I consider 
machinery a curse. The time will come, I presume, when it will be a 
blessing, but now it is (and is so confessed to be) a curse to the working- 
man. A man might be happy with one coat if somebody else near him 
had not got five coats a good deal finer. 

The Chairman. You regard machinery as a blessing to the working- 
man if he can find employment, but you think that when the machinery 
becomes a monopoly it is an injury to the workingman! 

Mr. McAuliffe. Yes; in order to keep even with the increase of 
labor-saving machinery the hours of labor must be reduced. That is 
the only possible way in which half of the working people can live. 

Views of Mr. C. F. Kenyon. 

Mr. C. F. Kenyon came before the committee as a volunteer witness. 
The Chairman. What organization do you represent % 
Mr. Kenyon. I came herefrom the trade and labor council. I come 
especially in the interest of the shoemakers. I believe that the shoe- 
making craft to-day in the city of Chicago is the heaviest sufferer of 
all the crafts here. That trade has fallen off within the last eight months 
nearly, if not quite, 33 per cent. Where there were 500 men employed 
in a factory, there are not now over 350. A majority of the men in that 
trade are out of employment, aud the others are only working one-half 
or one-third of the time. 



DEPRESSION IN LABOR AND BUSINESS.* 121 

The Chairman. What proportion of the men in that trade are out of 
employment % 

Mr. Kenyon. I should say about 33 per cent. 

The Chairman. How long have they been out of employment 1 

Mr. Kenyon. About eight months. 

The Chairman. Is there any prospect of things becoming im- 
proved ! 

Mr. Kenyon. None whatever. In that trade the worker has been in- 
jured by the introduction of new machinery and by work going to pris- 
ons. A particular firm here has introduced a great number of new ma- 
chines that affect every branch of the shoe business ; and in that shop 
alone two out of every five workers have been thrown out of employ- 
ment. That firm does not send work to the prisons. 

The Chairman. To what prisons is shoemaking work sent? 

Mr. Kenyon. To Joliet, to Waupun, Wis., to Michigan City, Ind., 
and to Jefferson City, Mo. 

The Chairman. What kind of work is sent there ! 

Mr. Kenyon. The most inferior kind of work. 

The Chairman. How much cheaper is the work done there than it 
can be done here in the city ? 

Mr. Kenyon. Convict laborers there get probably 40 or 45 cents 
a day. Here a man, if steadily employed, gets $2 or 82.50. If he is a 
skilled workman, and works by the piece, he earns more. 

The Chairman. Is all labor in the shoemaking business done by the 
piece ? 

Mr. Kenyon. Yes, sir ; nearly all. Within the last eight months they 
have inaugurated a new method of working here, and are trying to hire 
the men by the week. It has been a losing affair in one or two in- 
stances, but the employers hope, by reducing the wages again, to get 
the rate so low down as to make up for what they have lost. 

The Chairman. Has it been a rule for years in this city in your trade 
to work by the piece? 

Mr. Kenyon. Yes : and is so throughout the whole United States. 

The Chairman. Is the shoemaking business in this city in a worse 
condition now than it has been at any time since 1873 f 

Mr. Kenyon. It is, most assuredly. 

The Chairman. Are there prospects of improvement in it ? 

Mr. Kenyon. Xone whatever, because a majority of the work is go- 
ing to the prisons. By the use of machinery there manufacturers are 
enabled to take a good portion of the work from us and give it to con- 
victs. The convicts can do the work much easier* and learn it more 
rapidly, than they could before the introduction of machinery. We do 
not object to the use of machinery in the trade if we could abolish the 
prison contract system. There would be then plenty of work, even with 
machinery, and the use of machinery would not interfere with our 
wages. It is the convict work that is the principal stumbling-block in 
our way. 

Mr. Martin. Do you consider the convict labor the cause of the de- 
pression in the trade i 

Mr. Kenyon. I do — that combined with machinery. ■ But if we could 
remove one cause (the contract system) we would have removed the 
principal cause. 

Mr. Martin. Then your remedy would be to abolish the convict labor 
system J l 

Mr. Kenyon. Assuredly. 



122 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Martin. And you think that if that were abolished, the disad- 
vantage in regard to machinery could be endured % 

Mr. Kenyon. Yes. 

Mr. Sherwin. What would you do with the convicts f 

Mr. Kenyon. I do not know ; there have been various theories ad- 
vanced on that point. I am not a very deep thinker myself on the sub- 
ject, but I think I would utilize Alaska for convicts, just as England 
utilizes Australia. Under the protective policy of the government the 
laboring man in the United States is protected against the cheap labor 
of England, but he is not protected against the cheap labor of the State 
prisons. 

Mr. Sherwin. Suppose that the convicts were put at unskilled labor f 

Mr. Kenyon. That would affect the common laborer. 

Mr. Sherwin. Suppose that the convicts were put to labor on public 
works ? 

Mr. Kenyon. I think that that would work first-rate. It would be 
an advantage to the State, and would be at the same time no detriment 
to the common laborer. 

Mr. Martin. Is the unskilled labor as depressed in this city as the 
skilled labor? 

Mr. Kenyon. Yes, to as great an extent. 

Mr. Martin. What is the cause of that % 

Mr. Kenyon. I cannot tell you. 

Mr. Martin. Are there people in the city who cannot get work ? 

Mr. Kenyon. Yes, sir ; I myself have been out of employment for 
nearly seven months. 

The Chairman. Have you been seeking employment all that time 1 

Mr. Kenyon. Very nearly all that time. 

Mr. Martin. Have you always lived on the proceeds of your labor ? 

Mr. Kenyon. Yes, sir. 

Mr. Martin. How have you been living for the last seven months % 

Mr. Kenyon. I do a little writing occasionally for parties outside of 
my business. 

Views of Mr. George Rogers. 

Mr. George Rogers appeared before the committee as a volunteer 
witness, and stated that he was an iron-moulder. 

The Chairman. Let us hear the condition of the people in your 
trade ? 

Mr. Rogers. The people engaged in my industry have been reduced 
fully 60 per cent, since 1873, in this city, although in the statistics fur- 
nished to the committee the reduction is only set down at 37 and a 
fraction. 

The Chairman. The iron business has been more depressed since 
1873 than any other business. 

Mr. Rogers. Not in the stove branch. 

The Chairman. What proportion of the men in your trade are out of 
employment at this time I 

Mr/RoGERS. At this season of the year they are mostly all employed. 
This is the busy season. Our slack season is in the winter months, 
January, February, and March. 

The Chairman. During the summer season you are generally all em- 
ployed % 

Mr. Rogers. Yes. 

The Chairman. Where is the falling off? 



DEPRESSION IN LABOR AND BUSINESS. 123 

Mr. Eogers. For the agricultural implement branch of the business 
winter is the busy time. 

The Chairman. Taking it as a general thing in your trade, are you 
iu a condition of improvement ? 

Mr. Kog-ers. No, sir ; we are going behind every day in our wages ,* 
since 1873 the wages have been decreasing ; they cut us off slice by 
slice ; they commenced with a reduction of 5 per cent, one year ; the 
next year the reduction was 10 per cent.; the next year 15 per cent.; and 
so on ever since the panic began. 

Mr. Sherwin. What do you suppose is the reason why your wages 
were cut down ? 

Mr. Eogers. Scarcity of money, I think. 

Mr. Sherwin. Do you suppose that if the manufacturers could pay 
you any more they would do so ? 

Mr. Eogers. I do not think they would ; they generally get their two 
feet in the trough and keep them there ; I think that the raw material 
has come down fully 50 per cent. 

Mr. Sherwin. Then it is not the times that are to blame, but the 
men ? 

Mr. Eogers. Yes ; it is the men ; iron has come down since 1873 50 
per cent, and labor has decreased, on the average all over the country, 
50 per cent, in that line of business. 

The CHAIR3IAN. Give us an idea of the rent of tenements in this 
city? 

Mr. Eogers. Do you consider a tenement-house with three rooms 
large enough for a man with a wife and three children ? 

The Chairman. In my country a tenement-house with three or four 
rooms is regarded as sufficient for the accommodation of an ordinary 
family. That is in the mining district. 

Mr. Eogers. That is about the idea here. As a general thing work- 
ingmen have to pay at the rate of $2 a room. For a house with three 
rooms they pay $6 a month ; with four rooms, $8 a month ; five rooms 
about $10 a month. 

The Chairman. Doos the tenant pay the taxes? 

Mr. Eogers. No, sir. 

The Chairman. Does the tenant pay for the repairs! 

Mr. Eogers. He pays for the repairs, but he does not pay the taxes. 
Some gentleman asked a question about tramps. I have been on tramp 
considerably too. I tramped at one time through Ohio and Michigan. 
Some of the farmers refuse a tramp anything to eat ; but there are lots 
of good farmers throughout the country who do xiot refuse a tramp. 
Some farmers when they see tramps coming along set the dogs on them. 
I was always willing to labor, because I had a wife and family to sup- 
port, and there are hundreds of these tramps who have wives and fami- 
lies to support. 

Mr. Cowgill. How often were the dogs set upon you ? 

Mr. Eogers. I cannot say ; but it was more than once. That was in 
Ohio near the Michigan State line. When I crossed the State line and 
got into Michigan I was often refused a drink of water because I was a 
tramp. I asked a drink of water one day from three or four women who 
were sitting in a log house, and they commenced laughing at me and 
abusing me. 

The Chairman. In your judgment have not the greater portion of 
these men who are called tramps been driven into that condition because 
they could not procure employment, and are they not willing to work if 
they could get employment 1 



124 DEPRESSION IN LABOE AND BUSINESS. 

Mr. Rogers. Certainly they were. Previous to 1873 such a thing as 
a tramp was not known in the country. That shows that the tramp 
system is the result of the depression of labor. 

" The Chairman. You heard the word tramp applied before to mechan- 
ics going from one place to another in search of employment ? 

Mr. Rogers. Certainly, I did. 

The Chairman. And you never heard the word tramp applied to the 
same class of men to whom it is now applied ? 

Mr. Rogers. No ; it is only the newspapers that apply it. I do not 
think that any honest American citizen applies it. 

The Chairman. In your travels were you after work % 

Mr. Eogers. I was. 

The Chairman. Were there others with you in like destitution who 
were also looking for work ? 

Mr. Rogers. Yes, sir. 

The Chairman. Was there any misbehavior on the part of those per- 
sons with you, or any crimes committed by them % 

Mr. Rogers. There was not any crime committed by them. At one 
time we were hungry and called at a house and asked for a cold lunch. 
The woman refused us, and one of the fellows went in and took half a 
loaf of bread out of the house and we ate it. It was just after the 
dinner hour and the bread was on the table. We asked £he lady of the 
house to give us a little something to eat, as we were hungry and had 
been tramping all day. She said she had nothing in the house. Then 
one of the men who was with us went into the house and took out a half 
loaf of bread and we sat down and ate it. That was the only crime I 
ever saw committed by tramps. 

The Chairman. Were you wandering from one part of the country 
to another, wihout any definite object % 

Mr. Rogers. I was looking for employment at my trade. 

The Chairman. Were you going from one iron establishment to 
another % 

Mr. Rogers. Yes ; from one city to another. 

The Chairman. With a prospect of getting work at your trade ? 

Mr. Rogers. Yes, sir. 

The Chairman. How long were you in that condition ? 

Mr. Rogers. I have been in that condition several times. 

Mr. Cowgill. If you could not get work at your trade, why did you 
not abandon it and go to something else % 

Mr. Rogers. I have done so already. I found that I could not make 
in honest living at my trade ; so I abandoned it; and there is not one 
mechanic out of a hundred who can make an honest living at his own 
trade. Questions have been asked about machinery. I do not myself 
believe in making a co-operative institution out of the government. I 
do not believe in the government running railroads, and steamboat 
lines, and telegraph lines. I know that the Post-Office Department is 
run on the co-operative principle : but just look at the pool which the 
Republican party has got in the Post-Office Department, and in the 
custom-houses. I believe that there are some 80,000 employees in the 
Post-Office Department ; and do you not suppose that the Republican 
party controls the whole of their votes % 

The Chairman. Ask Mr. Cowgill, here. 

Mr. Cowgill. I know that it does not by a great deal. 

Mr. Rogers. Now, if the government should go to work and run the 
railroads, where there are nearly a million of employees, the party in 
power would control their votes. So with the telegraph and steamboat 



DEPRESSION IN LABOR AND BUSINESS. 125 

Hues. And by and by there would be no right of franchise in this 
country at all, beeause the party in power would always manage to 
keep in power. 

Mr. Sherwin. What do you want the committee to recommend I 

Mr. Rogers. I should certainly recommend this committee to do all 
it can in the way of distributing land amoug the poor. 

Mr. Sherwin. You would recommend an addition to the homestead 
law? 

Mr. Eogers. I should give homestead settlers four or five or six hun- 
dred dollars on a small rate of interest not to exceed 4 per cent. I 
think that if such a plan were in operation 15,000 would leave this city 
to-morrow and go on farms. 

Mr. Sherwin. How long do you suppose they would stay on farms ? 

Mr. Rogers. I wish I had money to go on a farm, and I would stay. 

Mr. Sherwin. Do you know anything about farming? 

Mr. Rogers. I know considerable about farming ; I was raised on a 
farm. The question is often asked workingmen why they do not go 
west and settle. If a man who asks that question will only give the 
wherewithal he will find lots of men to go. As it is now with working- 
men they are $120 in debt at the end of the year, and they cannot pay 
that off unless their wives take in washing. My wife does not do that, 
but she keeps a boarding-house. There is not one of these men whose 
wives and children have not to do something to help. That is a reason 
why I want to do away with child labor, which certainly does come 
in conflict with unskilled labor. Every child that is employed in a 
factory keeps a man out of employment. The children should be sent 
to school. We want education in this country. Every man should 
know his rights, and statistics show that we have now a great number 
of uneducated people in this country. 

The committee here adjourned until 12 o'clock to-morrow. 



Chicago, July 30, 1879. 
Views of Br. James Taylor. 

James Taylor, Ph. D., came before the committee as a volunteer wit- 
ness. He stated in reply to preliminary questions that he is a resident 
of the city of Chicago, and has resided here permanently for the last 
five years ; that he came to this country in 1858, and has been living 
on his estate in Wisconsin ; that he is a physician, but is not now 
practicing. He said : Last year when I heard that the Hewitt com- 
mittee was about to come to this city, I prepared some memoranda to 
submit to it. The committee, however, did not come, but I understand 
that this committee is a continuation of that one. Therefore the re- 
marks which I had prepared to submit will be appropriate now. 

The Chairman. You may read your paper. 

Dr. Taylor thereupon read the following paper : 

To the Hon. Committee of Congress appointed to inquire into the cause of 

the depression of labor : 

I respectfully submit that if it were the first time that labor had been 
depressed, trade stagnated, and the prosperity of the people blighted, 
I should approach the subject with great diffidence; but it is well 



126 DEPRESSION IN LABOR AND BUSINESS. 

known to the committee that this country has been subject to periodical 
revulsions since the foundation of the government, and if all these re- 
vulsions can be traced to a common origin, and can be shown to be ef- 
fects produced by an identical cause, it may be fairly concluded that 
the depression of labor at the present time is the result of a latent but 
permanently operating force. 

This permanently operating force may be found in our monetary sys- 
tem, and the history of panics points significantly to both the cause and 
the effect. Panics have been so frequent and so uniformly the sequel 
of contraction that it is astounding that there can be a shadow of doubt 
as to their cause on the mind of any one who has given attention to the 
subject. Panics have always been preceded by a contraction of credit 
and currency, and universally followed by depression of trade, commerce, 
and labor, which I shall endeavor to show. 

The early history of the colonists gives a remarkable instance of the 
effect of a monetary system on the prosperity or impoverishment of a 
people — its power to produce contentment and order or give rise to dis- 
content and turbulence. The progress of the colonies was so rapid that 
England became jealous of their prosperity. This prosperity had been 
achieved by a circulating medium of bills of credit, which for a time was 
their only money. Such was the rapid advancement of the colonies 
with this purely American money that Edmund Burke said of them : 
" Nothing in the history of mankind is like their progress. For my part 
I never cast my eye on their commerce and their cultivated and com- 
modious life but they seem to me rather natious grown to perfection 
through a long series of fortunate events and a train of successful in- 
dustry, accumulating wealth in many centuries, than the colonies of yes- 
terday—than a set of miserable outcasts a few years ago, not so much 
sent as thrown on the bleak and barren shores of a desolate wilderness 
3,000 miles from all civilized intercourse." 

In 1772, and for some time previous, England manifested objections 
to the colonial paper-money, at length determined to prohibit its use, 
and required all taxes to be paid in coin. When this subject was under 
discussion, Benjamin Franklin, then in England, defended the paper- 
money of the colonists. He said : lk On the whole, no method has hitherto 
been framed to establish a medium of trade, in lieu of money, equal in 
all its advantages to bills of credit founded on sufficient taxes for dis- 
charging them, or land securities of double the value for repaying them 
at the end of the term, and in the meantime made a general legal tender. 
The experience of now nearly a century in the middle colonies (New York, 
New Jersey, and Pennsylvania) has convinced them of it among them- 
selves by the great increase of their settlements, numbers, buildings, 
improvements, agriculture, shipping, and commerce, and the same ex- 
perience has satisfied the British merchants who trade thither that it 
has been greatly useful to them, and not in a single instance preju- 
dicial." Nevertheless, the British Government determined to suppress 
bills of credit, and passed a law to that effect. 

This went into operation in 1773, caused a contraction of the circu- 
lating medium, which paralyzed all the industrial energies of the people. 
Kuin seized upon these once flourishing colonies, the most severe dis- 
tress was brought home to every interest and to every family, discon- 
tent was urged to desperation, till at last human nature arose and as- 
serted its rights. 

There can be no doubt that the business depression, added to a de- 
mand for taxes in coin, which they did not possess, aggravated the 



DEPRESSION IX LABOR AND BUSINESS. 127 

colonists as much as the imposition of taxes, and precipitated the Rev- 
olution. 

Panics have occurred with all their train of disasters in 1809, 1814, 
1819, 1825, 1831, 1837, 1839, 1811, 1857, 1861, 1873, all of which have 
had a like cause. 

I subjoin a report of a committee of the State legislature of Xew York 
on the panic of 1819. 1 subjoin, also, a report of a committee of the 
senate of the State of Pennsylvania in 1820. 

These reports will show the state of the country in those years to be 
precisely like the present ; and though these reports are now sixty years 
old, they are as applicable to the circumstances of the present time as 
they were to the circumstances that then called for investigation. 

Every panic has been preceded by contraction and followed by shrink- 
age of value and business stagnation, so that an investigation into one 
panic is sufficient to explain the cause of all. 

In 1836, the prosperity of the United States was such that the whole 
of the public debt was paid off, and forty millions of dollars had accu- 
mulated in the Treasury in excess of the public requirements. This 
revenue had accrued under the extraordinary activity of trade, occa- 
sioned by the public deposits being placed with private banks, after 
their removal from the United States Bank. Large issues of currency, 
based on these deposits, were made. But Congress ordered the 
$10,000,000 of surplus revenue to be divided among the several States ; 
this withdrew the basis of the bank issues, and trade received a shock. 
Many banks failed, and the government lost $2,000,000 by broken 
banks. Upon this President Jackson determined that the public reve- 
nue should be paid in coin, and accordingly issued the u specie circu- 
lar "; this soon withdrew coin from the banks, caused the suspension of 
many, and occasioned the panic of 1837. Thus, from the height of pros- 
perity the country was cast into the depth of adversity by an extraor- 
dinary demand for coin, which was not attainable. Here is both cause 
and effect, not a mere coincidence. There are those who attribute the 
present embarrassment to the large public debt, but here is historical 
proof that the country has had depression both of labor and trade ichen no 
debt existed. A deficiency of currency was the cause of this panic, 
coupled with an unusual demand for coin. 

Business, after a time, revived, the banks had resumed, but now began 
the discussion of the "sub-treasury act/' The mere apprehension of 
losing the public deposits checked the amount of issues by solid banks, 
but reckless adventurers soon found a field for their operations, and the 
country was flooded with "wild cat." In 1810, the sub-treasury act 
was passed, placing the public money in the sub- treasuries. The banks 
again suspended, panic followed, thousands of merchants were ruined, 
real estate fell in value, multitudes of men were thrown out of employ- 
ment, and want and crime became general. Here, again, is cause and 
effect very plainly evinced. There was an insufficiency of coin. 

In 1857, England drew from the United States thirty millious of dol- 
lars to support the tottering credit of the Bank of England. This again 
withdrew the basis of bank circulation, panic followed, with all its train 
of evils, spreading disaster broadcast — a similar result from a similar 
and adequate cause, the want of more coin. In 1861 the first loan of the 
war was made by the associated banks to the amount of 8150,000,000. 
Secretary Chase demanded payment in coin ; the result was that all the 
banks suspended in December of that year. Gold was insufficient. 
Like causes may be shown to have occasioned all the panics in this 



128 DEPRESSION IN LABOR AND BUSINESS. 

country and in England, and are now operating in Germany, to -which 
attribute the rise of communism and general discontent 

When we find a uniform sequence of undue contraction followed by 
depression and discontent, we are justified in the conclusion that the 
first is the cause, and the second the effect. But not only is the defect- 
ive monetary system the cause of panics, but it is a standing impedi- 
ment to the progress of the American people. To say that panics are 
caused by overtrading is arrant nonsense ; the true cause is an insuffi- 
ciency of legal-tender money, which checks trade and causes a falling 
off of consumption. 

In 1861, the banks having suspended, the Treasury note became a nec- 
essity; the war was growing in magnitude and the exigencies of the 
government great. The bank-note currency broke down, proving that 
in peace it brings panics and in war is an utter failure. 

The panic in 1873 was the result of contraction commenced in 1866; 
that it did not culminate sooner, was because it required time to produce 
a universal effect. In 1866, trade was carried on mainly on a cash basis, 
but when contraction began, the eagerness of men to maintain their 
trade led them to give credit; this in a few years failed, and brought 
with it loss of confidence as well as loss of money. 

The annual increase of the number of bankrupts tells the irrefragable 
tale, and the great depression of trade confirms the fact that contraction 
of the medium of payment is the sole cause of the adversity that over- 
whelms the land and threatens turbulence and violence. Having pointed 
out that panics, revulsions, and disaster are the result of defective cur- 
rency, perhaps it will be thought incumbent upon me to show 

WHAT THESE DEFECTS ARE. 

On this subject I have long come to a conclusion which is warranted 
by experience and confirmed by history. The insufficiency of coins be- 
came evident as early as the twelfth century. Commerce, by the enter- 
prise of the Venetians, had greatly increased. To facilitate exchanges, 
the debt of Venice was made available as a mediums, of exchange. The 
transfer of credit from one to the other was made in settlement of com- 
mercial transactions. Thus dead capital was converted into active 
capital. 

To obviate the inconvenience of coins and the loss from attrition, cer- 
tificates of deposit were issued and used as money ; and this system 
was introduced in England in the latter part of the twelfth century by 
Italians, who were familiar with the practice in Venice. These men be- 
came the fiscal agents of the feudal land lords and grew in credit. They 
received deposits for safe-keeping, and soon found that their notes, pay- 
able to bearer, would pass from hand to hand as money, and yield them 
as great a profit as so much money. On this principle banks of issue 
were founded, and this is the practice of the English and American 
banks to this time. 

This system reverses the order of business, and gives to a privileged 
class the advantage of receiving interest on what they owe. It has 
nothing but custom to recommend it ; it is neither useful, safe, equita- 
ble, nor necessary, and has caused repeated disasters wherever it has been 
practiced. It will be perceived that this system of currency came into 
use without legislation ; it is not the result of any well-considered law, 
but a mere custom, which has been tolerated until a powerful interest 
has grown up dangerous to commerce, dangerous to society, and danger- 
ous to the State. Promissory-note currency is a pernicious medium of 



DEPRESSION IN LABOR AND BUSINESS. 129 

exchange; such notes are always issued in excess of the means of pay- 
ment, and hence the frequent panics. Whenever there is a general de- 
mand for payment, the banks contract tbeir accommodation and cm- 
tract their issues, to save themselves, regardless of every other interest. 
They bankrupt by this process thousands of citizens, and not unfre- 
quently they bankrupt themselves. There are very few meu living that 
have not suffered by promissory-note currency. 

The legislation of the last twelve years has been conducted on the 
principle of bankers. It was introduced into Congress on the recommend- 
ation of Secretary McCulloch, a banker, whose experience did not go 
beyond the experience of a banker, but it has proved a great calamity 
to the country. It has bankrupted thousands, ruined hundreds of thou- 
sands, it has reduced many that were prosperous to poverty, and driven 
many in their despair to self-destruction. 

The great evil of promissory-note currency is that banks can contract 
and inflate the currency at pleasure. Inflation sets the industries of the 
country in activity, multiplies production, and increases the prices of 
labor and every kind of property. Then follows contraction, industries 
are interrupted, trade stagnated, aud a depreciation of all values except 
money. Capitalists then gather in by foreclosure the savings of in- 
dustry. 

The fortunes of industrious citizens are periodically transferred to the 
money-lender. It is by this system that in Euglaud wealth. has been 
gathered .into the bauds of the few while the masses are in poverty. The 
absurdity of the State bank currency may be illustrated thus : A banker 
pays out his unsecured note bearing no interest, to discount the note of 
another which bears interest and is well secured. 

The contraction of the currency has doubled all indebtedness by rais- 
iug the value of money; it has doubled our taxes and diminished the 
means of payment, A bushel of wheat in 1866 would pay two dollars 
of tax; it will not pay more than seventy-five cents now. 

Consumption has fallen off because of the poverty of the people. All 
the depression, poverty, and much of the crime that now overwhelms 
the country are the result of the contraction of the currency. 

A few words as to 

WHAT IS THE REMEDY. 

A century of experience has proved that bank-note currency is an un- 
mitigated evil. It places the control of the supply of currency in the 
hands of men whose personal gain is their sole object, regardless of all 
other considerations. When trade is active and requires expansion, 
banks, governed by the amount of their reserves, contract their issues, 
curtail their accommodations, and thereby embarrass the whole trade 
of the country. A currency based upon private credit is ever fluctuat- 
ing in volume, not in accordance with the wants of trade, but directly 
the opposite. The greed of gain leads them to hold the minimum of re- 
serve, and hence the commerce of the nation is in perpetual jeopardy. 
The remedy is to substitute national security in the place of private 
credit, We shall then have no general run for payment, and, conse- 
quently, no panics. 

As much currency as is necessary to effect the exchauges of the coun- 
try would float at their face value, and thus we should have a measure 
of the wants of trade — as much as would float at par. This limit is based 
on the fundamental principle that governs all prices, namely, supply and 
demand. This would be only substituting the credit of the nation for 
H. Mis. 5 9 



130 DEPRESSION IN LABOR AND BUSINESS. 

the credit of an individual or firm — the whole for a part — the highest 
security for an iuferior one. 

The State banks were a great evil, but national banks are a still 
greater evil; their capital is locked up in bonds, and the whole risk is 
thrown on depositors. It is true their notes are secured, but they are 
redeemable in greenbacks, therefore they are not better than greenbacks. 
It would on that account be better to have legal tender government 
notes and save the interest on that amount of debt. National banks 
would then sell their bonds and employ their capital in their business, 
greatly to their own advantage and to the advantage of the business of 
the country, and at the same time give security to depositors. It is 
absurd for a money-lender to lock up his capital in bonds and trade 
with the deposits of his customers. It is unfair to depositors that the 
whole risk of failure should be cast upon them when they have no share 
in the profits of success. Besides, to lock up bank capital in bonds with- 
draws so much capital from trade and tends to stagnate. industries. 
The profits of banks,depend on the prosperity of the people; therefore 
it would be to the advantage of banks to retire their issues, to be re- 
placed by national money. National currency issued to the extent pro- 
posed would not be inflation, but promissory notes of banks are sure to 
be issued in excess of the gold in the hands of the banks, and thus will 
inflation, followed by contraction, panic, aud commercial disaster; be 
perpetuated. As it has been in the past so it will be in the future, and 
committees of inquiry will be as necessary in 1920 as they were in 1820, 
and the results will be the same. Prosperity may be again restored to 
the country by repealing all acts of financial legislation for the last 
seventeen years, except the tax on State bank issues, and let the legal- 
tender act, as it passed the House before it was mutilated in the Senate, 
be made a law. We shall hear no more of "hard times,'' and the "de- 
pression of labor" will cease to be a matter of inquiry. The commerce 
of the world has outgrown the supply of gold, and every attempt to 
make all forms of credit redeemable in gold can result only in commer- 
cial disaster, depreciation of values, increase of indebtedness, and de- 
pression of industries. 

These views are respectfully submitted to the honorable committee by 

JAMES TAYLOR, Ph. D., 

Chicago, III. 



REPORT OF THE COMMITTEE OF THE STATE LEGISLATURE OF NEW YORK IN 1818. 

Of all aristocracies none more completely enslave a people than that of money, and, 
in the opinion of your committee no system was ever better devised so perfectly to 
enslave a community as that of the present mode of conducting banking establish- 
ments. Like the Siren of the fable, they entice to destroy. They hold the purse-strings 
of society, and by -monopolizing the whole of the circulating medium of the country 
they form a precarious standard, by which all property in the country — homes, lands, 
debts and credits, personal aud real estate of all descriptions — are valued, thus render- 
ing the whole community dependent on them, proscribing ever^y man who dares to 
expose their unlawful practices. If he happen to be out of their reach so as to require 
no favor from them, his. friends are made the victims, so no. one dares to complain. 

The committee, on taking a general view of our State, and comparing those parts 
where banks have been established with those that have none, are astonished at the 
alarming disparity. They see, in one case, the desolation they have made in societies 
that were before prosperous and happy; the ruin they have brought on an immense 
number of the more wealthy farmers, and they and their families suddenly hurled from 
wealth and independence into the abyss of ruin and despair. If the facts stated in 
the foregoing be true (and your committee have no doubt that they are), together with 
others equally reprehensible and to be dreaded, such as that their influence too fre- 
quently, nay, often already, begins to assume a species of dictation altogether alarm- 
ing, and unless some judicious remedy is provided by legislative wisdom, we shall soon 



DEPRESSION IN LABOR AND BUSINESS. 131 

witness attempts to control all selections to offices in onr comities, nay, the elections 
to. the very legislature. Senators and members of assembly will be indebted to tin; 
banks for their seats in this capitol, and then the wise end of our civil institutions will 
bo prostrated in the dust of corporations of their own raising. 



REPORT OF THE COMMITTEE OP THE SENATE OP THE STATE OP PENNSYLVANIA, CONDY 
RAGUET, CHAIRMAN, FEBRUARY 20, 1^20. 

In ascertaining the extent of public distress, your committee has had no difficulties 
to encounter. Members of the legislature from various quarters of the State have been 
consulted in relation to this subject, and their written t stimony in answer to interrog- 
atories submitted to them by the committee have agreed, with scarcely a single excep- 
tion, on all material points. 

With such respectable weights of evidence, added to that which has been derived 
from the prothonotaries, recorders, and sheriffs of the different comities; from inter- 
course with numerous private citizens residing in different parts of the State, as well 
as petitions presented to the legislatuies, your committee can safely assert that a dis- 
tress, unexampled in our country since the period of its Independence, prevails through- 
out the commonwealth. This distress exhibits itself under the various forms of : 

1. Ruinous sacrifices of landed property at sheriffs sales, whereby in many cases 
lauds and houses have been sold at less than ha'f, a third, or a fourth of their former 
value, thereby depriving of their homes and the fruits of years of labor a vast number 
of our industrious farmers, some of whom have been driven to seek in the uncultivated 
forests of tbe West that shelter of which they have been deprived iu their native 
State. 

2. Forced sale of merchandise, household goods, farming stock, and utensils, at prices 
far below the cost of production, by which many families have been dej)rived of the 
common necessaries of life and of the implements of trade. 

3. Numerous bankruptci s and pecuniary embarrassments of every description, as 
well among agricultural and manufacturing as among the mercantile classes. 

4. A general scarcity of money throughout the country, which renders it almost im- 
possible for a busbar, clman or other owners of real estate to borrow at usurious interest, 
and when landed security of the most indubitable character is off re 1 as a pledge. A 
similar difficulty of procuring on loan had existed in the metropolis previous to October 
last, but has since been partially removed. 

5. A general suspension of labor, the only legitimate source of wealth in our cities 
and towns, by which thousands of our most useful citizens are rendered destitute of 
the means of support and are reduced to the extremity of poverty and despair. 

6. An almost < ertain cessation of the circulation pi commodities and a consequent 
stagnation of business, which is limited to the mere purchase and sale of the necessaries 
of life and of such articles of consumption as are absolutely required by the season. 

7. A uuiversal suspension of all manufacturing operations, by which, iu addition to 
the dismissal of the numerous productive laborers heretofore engaged therein, who can 
find no other employment, the public loses the revenue of capital invested in machin- 
ery and buil lings. 

8. Usurious extortions, whereby corporations instituted for banking, insurance, and 
other purposes in violation of law possess themselves of the products of industries 
without granting an equivalent. 

{). The overflowing of our prisons with insolvent debtors, most of whom are confined 
for trifling sums, whereby the community loses a portion of its effective labor, and 
is compelled to support families by charity who have thus been deprived of their pro- 
tectors. 

10. Numerous lawsuits upon the dockets of our courts and of our justices of the 
peace, which lead to extravagant costs and loss of a great porti- n of valuable time. 

11. Vexatious losses, arising from the depreciation and fluctuation in the value of 
bank notes, the impositions of brokers, and the frauds of counterfeiters. 

12. A general inability in the community to meet with punctuality the payment of 
debts even for family expenses, which is experienced as well by those who are wealthy 
in property as by thus-* who have hitherto relied upon their current engagements. 
With such a mass of evils to oppress them, it cannot be wondered at that the people 
should be dispirited, and that they should look to their representatives for relief. 
Tneir patient endurance of suffering, which can only be imagined by those who have 
habitually intermingled with them at their homes and their tiresides, merits the com- 
mendation of the legislature and prefers a powerful claim to their interference. 

These reports have been appended for the purpose of showing that 
like circumstances have existed, and that the present depression is but 
a repetition of like results from like causes. 

J. TAYLOR. 



132 DEPRESSION IN LABOE AND BUSINESS. 

The Chairman. Have you anything further to state ? 

Dr. Taylor. If I have omitted anything, I would not object to an- 
swering any questions. These are historical facts. I have endeavored 
to search history and to place the facts before the committee; the 
committee can form its own opinions. My views probably would be of 
no use, but the facts may be useful. My opinion is that so long as we 
have a promissory-note currency we shall continue to have panics. 
There will always occur times when there will be a general run for pay- 
ments, and whenever there is a general run for payments, banks cannot 
meet their promissory notes ; therefore that is an unsound system of 
currency 5 it is a system which has reduced one large class of the English 
people to pauperism; it has taken the States out of the hands of one 
class to put them into the hands of another, until the landholders have 
diminished in number from two to three hundred thousand to some three 
thousand. A man buys a house and leaves some of the purchase-money 
on mortgage ; then one of these panics comes along, the man is thrown 
out of work, or his trade fails, and if he cannot keep up the payments 
on his mortgage, the mortgage is foreclosed and his property is taken 
from him. Thus generation after generation has to give up all its sav- 
ings. 

The Chairman. What, in your opinion, is the remedy for the troubles 
of the last seven or eight years ? 

Mr. Taylor. The remedy is easy; it is this: Eetire all promissory- 
note currency, no matter how. 

The Chairman. What do you mean by promissory note currency ? 

Mr. Taylor. I mean a currency where a bank promises to pay gold 
for its notes, and it has not got the gold to pay. That is a dishonest 
promise and a dishonest money. Every man admits that there is not 
gold enough in the world to conduct the business of the world if con- 
ducted with metallic money only. A great part of the commerce of the 
world is done with paper. That paper is simply private credit; now, 
instead of using private credit, I want to use a higher class of security, 
and, as the whole is greater' than a part, I say that the security of the 
government is greater than the security of any individual or of any 
firm. Therefore I say that the government should issue paper, and 
should not promise to pay gold for it. A good bill or draft will sell as 
easily as a commodity, and consequently it is not necessary that all 
money shall be redeemed in gold, provided it is redeemed in something 
marketable and of equal value. There is nothing that the govern meut 
can command except its own securities, and therefore in time of a panic 
or a run the government should give its bonds for notes, if demanded. 

The Chairman. You think that the credit of the government, if it 
is good to issue a bond, is good also to issue a legal tender % 

Dr. Taylor, Perfectly so, when that note is convertible into a bond. 
A bond is a marketable commodity that can be sold in any nation. 
You can sell a bono! as easily as you can wheat, or silver, or gold, and 
as long as you have a convertible commodity that is marketable any- 
where you have a thing as good as gold itself. Our mistake is simply 
hanging on to an old system ; the commercial world has outgrown the 
produce of gold and silver, and all nations are suffering in the same 
way. Why should commerce and labor stand still if the supply of gold 
and silver fails % We would conduct trade if gold and silver did not 
exist at all. 

The Chairman. Have you ever seen in this country any destruction 
of credit and of business and labor to compare with that which has oc- 
curred here within the last ten years ? 



DEPRESSION IN LABOR AND BUSINESS. 133 

Dr. Taylor. I never have ; but it was also very bad here in 1857. 

The Chairman. And yet it is pretended by business men here that 
there is no difficulty and no trouble in the affairs of the country. 

Dr. Taylor. The bankruptcy lists prove the contrary. I have here 
au extract from President Johnson's message to Congress in 18G0, show- 
ing that the country had paid off a large amount of the national debt 
within fourteen months of the war, and now since i he contraction of the 
currency no part of the national debt has been paid off. In fact our 
national debt now is as large as it was at the close of the war, because 
now it is worth 100 cents on the dollar, and then it was only worth 50 
cents. Before the contraction of the currency we were paying off the 
debt at the rate of a hundred millions a year. Now we are not paying 
off any of it. 

Mr. Sherwin. Have you seen the last report of the Secretary of the 
Treasury ? 

Dr. Taylor. I have seen too many of his reports. They are unreli- 
able. 

Mr. Sherwin. How do you prove that ? 

Dr. Taylor. Because they contradict themselves. 

Mr. Sherwin. Wherein? 

Dr. Taylor. If 1 were to take up the Secretary's reports and examine 
them, I could show their self-contradictious. 

Mr. Sherwin. I would like to have you bring them in and point out 
these contradictions. 

Mr. Cowgtll. And so would I. If you know of any such contradic- 
tions in those reports, I would be glad to have you submit them to the 
committee. 

Dr. Taylor. The reports have been very extraordinary. 

Mr. Cowgill. I would prefer to see their contradictious pointed out 
rather than to hear you characterize them. 

Dr. Taylor. I will hunt them up. I will tell you what I do remem- 
ber. I was writing on the currency question and wanted to be accurate 
in my statements, and so I examined the reports of the Secretary of the 
Treasury. I had always understood that there were from seventy to a 
hundred millions of gold in the Treasury, and so I stated that the Sec- 
retary of the Treasury was hoarding the money of the country and was 
consequently interfering with trade. Mr. Sayler offered a resolution in 
the House directing the Secretary to make a return of the actual gold 
in the Treasury, and it turned out that instead of having seventy mil- 
lions of gold in the Treasury he had only fourteen millions. Now it is 
provoking to be examining a question and writing on it, depending on 
the Secretary's reports, and then to find that his reports are all false. 

Mr. Cowgill. You have a theory of your own in regard to the rem- 
edy for the evil you complain of. What evidence have you, beyond the 
mere theory that exists in your mind, that your remedy would work 
well and would bring relief? 

Dr. Taylor. I have proposed no theory. I make a great discrimina- 
tion between facts and opinions. I have simply shown from historical 
facts that the same results have come from the same causes, and that 
whenever contractions of the currency have taken place disasters have 
lollowed. 

Mr. Oowgtll. I understood you to say a while ago that the remedy 
was easy, and you then went on to say that we should dispense with 
promissory notes as a circulating medium, and should substitute some- 
thing else in lieu of them. Was I mistaken in so understanding you ? 

Dr. Taylor. That is quite true. I had forgotten that. I s*ay now 



134 DEPRESSION IN LABOR AND BUSINESS. 

again that these historical facts prove that so long as promissory notes 
are used as currency there will be periodical panics, 'because there al- 
ways will be runs on the banks for payment. 

Mr. Martin. Would you iucrease the volume of currency? 

Dr. Taylor. I would. 

Mr. Martin. To what extent? 

Dr. Taylor. I would issue as much of it as would float at par. 

Mr. Martin. How much is that? 

Dr. Taylor. Nobody can tell how much currency a country needs j 
no man can tell the necessary amount. 

Mr. Martin. What amount do you suppose this country needs! 

Dr. Taylor. There is a natural law of supply and demand which gov- 
erns all prices, and which applies to commodities as well as to money. 
If the trade of the country does not require all the circulation that is 
afloat the money will depreciate. 

Mr. Martin. Does the trade of the country require an increase of the 
currency now? 

Dr. Taylor. Most assuredly. Try it and see if more currency will 
not float at par. 

Mr. Martin. How much do you think the trade of the country de- 
mands? 

Dr. Taylor. In the first place I would replace the promissory notes 
of the banks with legal-tender notes. 

Mr. Cowgtll. Are not legal-tender notes simply promises to pay? 

Dr. Taylor. No, sir; they are not. A legal tender note is payment. 
It is a security that will sell anywhere. 

Mr. Martin. Would you retire the national bank currency ? 

Dr. Taylor. Most assuredly I would. 

Mr. Martin. And in their j;>lace you would issue Treasury notes? 

Dr. Taylor. Yes. 

Mr. Martin. To the extent that the volume of Treasury notes would 
float at par? 

Dr. Taylor. Yes; and if there is any doubt about getting them out, 
I will tell you how I would get them out. 

Mr. Martin. How ? 

Dr. Taylor. If I had been Secretary of the Treasury four years ago, 
instead of paying off the nationaldebt by the use of forty-year bonds, I 
would have bought gold and paid it off. That is one way in which the 
volume of currency could be increased. And I would find another 
method. I have heard persons talk about greenbacks being a war 
measure, but another war measure was the imposing of internal revenue 
taxation. 

Mr. Martin. Would you abolish -that ? 

Dr. Taylor.- I would abolish that. The internal revenue brings in a 
hundred millions a year to the government. I would abolish it and 
would rssue greenbacks to that amount. 

Mr. Martin. And have no internal-revenue taxation at all? 

Dr. Taylor. None at all. Up to lb(32 we had none. I would have 
it just now as it was before the war. 

Mr. Martin. Would you favor an income tax ? 

Dr. Taylor. I think an income tax a very fair tax, but it is a tax 
that cannot be very well maintained, because it is a tax on the wealthy 
and powerful, and they will always oppose it, and we always hud states- 
men yielding to them. The principle of an income tax is good, but I 
do not see that it is practicable. 



DEPRESSION IN LABOR AND BUSINESS. ldO 

Mr. Martin. Is it not not only good, bat just and right, that au 
come tax should be levied ! 

Dr. Taylor. Yes, I think it is. 

Mr. Martin. Suppose I own a farm worth $1,000, I have to pi 
tax on that farm ; and suppose a neighbor of mine has an income of 
$1,000, do you not think it fair that he should pay tax on his income ? 

Dr. Taylor. .The farmer pays no income tax. He pays on his prop- 
erty. And 1 would suppose that if a. man who has a mortgage on that 
property pays an income tax on his mortgage, the property is doubly 
taxed. 

Mr. Martin. How? 

Dr. Taylor. By a tax on the property itself and by a tax on the 
income from the mortgage. 

Mr. Martin. If I have to pay a tax on my farm that is worth $1,039, 
is it not right that my neighbor who has an income of $1,000 should 
pay a tax on that income ! 

Dr. Taylor. I approve of the principle of taxing an income, but I 
look upon it as impracticable. 

Mr. Martin. If my neighbor has a house which he rents for $1,000, 
would you tax that income of $1,000 ? 

Dr. Taylor. It is usually done. 

Mr. Martin. The house from which he derives his income of $1,000 
in the way of rent is taxed; would you also tax the $1,000 that he 
receives iu the way of rent ? 

Dr. Taylor. I think he could well afford to pay a tax upon it. The 
principle is a good one. 

Mr. Martin. If you tax the value of a house, would you also tax the 
income derived 'from the rent of the house! 

Dr. Taylor. If the practice is universal, I do not see any objection 
to it. 

Mr. Martin. Would you make it universal or not! 

Dr. Taylor. That is a matter of policy in regard to raising revenue. 
I do not think that my opinion would be of any value. 

Mr. Martin. A man having a farm worth $1,000, pays a tax upon 
that farm, does he not? 

Dr. Taylor. Yes, on the assessment. 

Mr. Martin. And it he raises 100 barrels of corn, wheat, and oats on 
that farm, does he not also pay a tax on that produce !- 

Dr. Taylor. I should not tax him on that again. 

Mr. Martin. But is not that the law ? Is not the corn and wheat 
and oats taxed in this state? 

Dr. Taylor. Y~es. 

Mr. Marten. Then would it not be fair and just to tax a man who 
receives an income from property that is already taxed, inasmuch as you 
tax the produce of the land on which he has already been taxed! 

Dr. Taylor. That would equalize them, of course. I am for doing 
justice to one and the other. On general principles, all should be taxed 
alike. 

Mr. Martin. Would you not tax a man who receives an income as 
well as a man who raises produce! 

Dr. Taylor. I would tax a man's property because it is there and 
the assessor can find it. I would tax his corn because the assessor can 
rind it. But where can an assessor find a man's income! 

Mr. Dickey. Suppose he has $1,000 income from investments in gov- 
ernment bonds! 

Dr. Taylor. But if the government has passed a law exempting bonds 



136 DEPRESSION IN LABOR AND BUSINESS. 

from taxation and lias sold its bonds under that exemption, I could not 
recognize the justice of the government in going back and taxing them. 

Mr. Dickey. Not taxing the bonds, bat the income from the bonds. 

Dr. Taylor. The income, I think, is taxable. 

Mr. Sherwin. Do you think that the government did wrong in ex- 
empting its bonds from taxation? 

Dr. Taylor. In times of emergency, governments have to do a great 
many things which might be unwise under other circumstances. 

Mr. Martin. Would you tax the interest accruing on these govern- 
ment bonds in the way of income! 

Dr. Taylor. I do not see why not. If incomes were taxed, I would 
tax all incomes. 

Mr. Sherwin. You know how the income tax worked in this country ! 

Dr. Taylor. I do. 

Mr. Sherwin. You made the observation that you can tax income if 
you can find it. Now, in making a tax law, is it not the part of wisdom 
to ascertain whether the tax can be collected ! 

Dr. Taylor. That is a very essential part. 

Mr. Sherwin. We found by experience that when the tax on distilled 
spirits was very high the government did not collect as much revenue 
from it as it has collected since the tax was reduced. So, I think, with 
tobacco. That principle has also been found to be true in England. 
Now, if experience has shown that in this country the income tax cannot 
be collected fairly, and that it leads to perjury and all sorts of devices, 
would you think it the part of wisdom to re enact an income law? 

Dr. Taylor, I would say not. It is a very inquisitorial tax. There 

are two objections to it : First, that it is inquisitorial and offensive, and 

.second, that it is difficult of collection. But yet I think that parties 

who have property and who enjoy the protection of the state ought to 

contribute to the expenses of the state. 

Mr. Sherwin. Then you mean to say that as a matter of absolute 
justice men ought to pay taxes according to their income, but that as a 
matter of policy an income tax cannot be collected ? 

Dr. Taylor. I think that men should pay taxes the same as they pay 
insurance against fire; that is, in proportion to the amount of their 
property. I think that every citizen should pay taxes in proportion to 
the amount of his property. But any law that cannot be carried out 
becomes a dead letter, and is worse than useless. 



Views of Mr. D. B. Sperry. 

Mr. D. E. Sperry came before the committee at its invitation. Fie 
stated, in reply to preliminary questions, that he resides in Batavia, 111.; 
that he is engaged in farming; and has been engaged in it for nearly 
twelve years. 

Mr. Sherwin. State any views that you have in regard to the de- 
pression in labor and business, and the cause of the present condition 
of things. 

Mr. Sperry. One great cause that produces depression in the price 
of labor is the present contract system — the manner of letting contracts 
in our prisons for mechanical labor. The market is being flooded with 
prison goods, and the prices of honest labor are being affected thereby. 
The State furnishes the capital, the building, the power, the oversight; 
pays the taxes, and hires the men at small prices ; and thus the country 
is flooded with manufactured goods without any regard to cost or to the 
demand for them. This country has been taxed millions of dollars in 



DEPRESSION IN LABOR AND BUSINESS, 137 

order to build up American manufactures, and now those manufactures 
are being torn down by convict labor. 

Mr. Sherwin. Do you know the number of convicts employed in 
skilled labor in the United States ? 

Mr. Sperry. I do not. 

Mr. Sherwin. Do you know the average rate of wages paid to con- 
victs ? • 

Mr. Sperry. Between 40 cents and 50 cents a day. 

Mr. Sherwin. Are there any particular trades that are injured more 
than others? 

Mr. Sperry. I suppose that the boot and shoe trade is injured most, 
and also the foundery business. 

Mr. Sherwin. Have you felt this competition in your own business? 

Mr. Sperry. Yes. 

Mr. Sherwin. Explain how this competition works. 

Mr. Sperry. In some instances the convicts are contracted out to 
irresponsible men, and the contract price is not paid to the State. 

Mr. Sherwin. The manufacturer who employs convict labor has no 
investment to make for machinery or power? 

Mr. Sperry. No, sir. 

Mr. Sherwin. Do you think it the duty of the State to support con- 
victs in idleness? 

Mr. Sperry. No, sir. I would punish them by putting them on public 
works, making improvements for which we cannot get appropriations, 
digging canals, making roads and streets, &c. 

Mr. Sherwin. Gould that system be carried out iu the prisons as 
constituted now? 

Mr. Sperry. No ; but I would let the counties take care of their own 
convicts, except the worse classes of them. 

Mr. Sherwin. Is there any such system ? 

Mr. Sperry. I do not know that there is. 

Mr. Sherwin. Has the effect of convict labor on the manufactures 
of the United States been investigated ? 

Mr. Sperry. Yes ; the Stove Founders' Association has investigated 
it very fully. Mr. Jewett, of Buffalo, is the president of that association. 

Mr. Sherwin. Have you the report of the association on that ques- 
tion ? 

Mr. Sperry. I suppose I have it at home, but I could not find it be- 
fore coming here. I will furnish it to the committee. I would take 
those convicts outside of competition with honest labor, and employ them 
in making canals and roads. 

Mr. Sherwin. You would not tax the people in order to support con- 
victs in idleness? 

Mr. Sperry. No, sir. 

The Chairman. How many penitentiaries are there in this State? 

Mr. Sperry. Two. But the worst effect of convict labor comes from 
the East, where they employ a large number of convicts on one class of 
labor — boots and shoes and foundery work. 

Mr. Sherwin. How can the general government pass any law that 
can affect that question ? The State of Illinois can control its own con- 
victs, but how can the State of Illinois prevent the importation of 
articles that are made from convict labor in New York and Pennsyl- 
vania ? 

Mr. Sperry. I do not know any other way out of it, except that 
Congress has the right to regulate commerce between the States ; and 
all convict goods should be stamped as convict goods. The real evil of 



138 DEPRESSION IN LABOR AND BUSINESS. 

convict labor has only commenced. In our own town fifty or seventy- 
five boys who are dow idle could be employed if it were not for couvict 
labor. These boys are growing up themselves to be convicts, whereas 
if they had employment they would become honest mechanics. But the 
work is now given to State prisons, and consequently the number of 
convicts is rapidly increasing. 

Mr. Sherwtn. What is the state of labor in your town and vidnity ? 

Mr. Sperry. Oars is a small manufacturing town. Business is better 
than it has been, although prices are not what they should be. 

Mr. Shkewin. Are all the men employed! 

Mr* Sperry. Nearly all this year. -A great many went away last 
year farther west. Labor is in a better condition this year than it has 
been, but the prices are not what they ought to be. 

Mr. Sherwin. Would you call the present state of business a healthy 
state ? 

Mr. Sperry. I think it is gradually getting on to be a healthy state. 
I do not think that iron manufacturing business is in a healthy state. 

Mr. Sherwin. How are the prices of the raw material — pig-iron, bar- 
iron, &c. — compared with the prices six months ago? 

Mr. Sperry. The prices of iron are somewhat higher, but not much 
higher, except in some particular branches. There has been a slight 
rise. 

The Chairman. What is the pig iron worth a ton ? 

Mr. Sperry. About $20 a ton, including freight. 

The Chairman. Is that charcoal iron ! 

Mr. Sperry. We are using mostly anthracite and bituminous fuel for 
iron. 

Mr. Sherwin. Have you any suggestion to make in order to make 
trade any better than it is ? 

Mr. Sperry. No, sir. When you are sick you have got to get well 
gradually. 

Mr. Sherwin. Is there any medicine that the State or nation can ad- 
minister that can do good % 

Mr. Sperry. So far as convict labor is concerned, I think that that 
evil might be remedied. Every State should take care of its own con- 
victs, and Illinois should not be compelled to take care of the convicts 
of Pennsylvania and New York. No State legislation can remedy this 
convict labor question. I understand that the State of Michigan has a 
law against teaching any mechanical trade to a convict; but Ohio, or 
Michigan, or New York, or any other State can flood us with convict 
goods. 

The Chairman. Have you plenty of currency here? 

Mr. Sperry. Yes; if we have something to give for it. 

The Chairman. Do you waut any more currency ? 

Mr. Sperry. We would like a little more silver. 

The Chairman. How about legal-tender notes ! Would you like a 
little more of that kind of currency 1 

Mr. Sperry. I would like to have it represent something. I would 
not care how much money there was in circulation if it was represented 
by gold and silver. 

Mr. Sherwin. Do you know any way by which people can get hold 
of money without giving something for it ? 

Mr. Sperry. No ; unless they steal it. 

The Chairman. But you conclude that it would do no harm to have 
a little legal-tender money issued by the government ! 

Mr. Sperry. I am not financier enough to know. 



DEPRESSION IN LABOR AND BUSINESS. 139 

Views of Mr. T. J. Morgan. 

Mr. T. J. Morgan appeared before the committee as a volunteer wit- 
ness. In answer to the Chairman, he stated : 1 am a resident of this city. 
I came here tirst in 18G9. I lived here for about eighteen months or 
two years, and then I went to work in Michigan. I am a machinist and 
glass finisher. 

The Chairman. What interest do you represent here ? 

Mr. Morgan. I am termed by the newspapers one of the gate- money 
men — one of the men who are always about when the hat goes around. 
I represent the socialists, i represent that class which is supposed to 
carry a torch in one hand and a dirk in the other. But for the informa- 
tion of the committee, I desire to say that I represent a class which 
works and which produces every day, and that as one of that class I 
am here to place properly before the committee the views which we en- 
tertain. I believe that the great body of the people (notwithstanding 
the press to the contrary) are satisfied that there is a great depression 
iu labor In this country. Congress is also satisfied of that fact, and 
hence the presence of this committee. The duty of this committee, as 
I understand it, is to learn the cause of that depression. I therefore 
propose, from the socialistic standpoint, to give to the committee the 
causes oi the preseut labor depression. 

The Chairman. Please define to the committee w T hat a socialist is. 

Mr. Morgan. As I understand it, a socialist is a man who has de- 
voted his study to the social aspects of industry, commerce, and society, 
or at least who has been investigating the principles on which society, 
industry, and commerce are based. 

Mr. Dickey. What are the purposes and objects of your association ? 

Mr. Morgan. To learn thoroughly what the industrial and social 
systems are, and by that means ascertain the causes of the prevailing 
discontent, the prevailing depression in labor, and the prevailing de- 
pression in business, 

The Chairman. What is the socialistic population of this city? 
r. Morgan. We voted as socialists on the socialistic agitation 
nearly eleven thousand votes last spring. 

The Chairman. Give us an idea of your particular line of policy. 

Mr. Morgan. I believe that the cause of our success iu Chicago has 
been our endeavor to point out to the wage class of the people their 
true position, and get them to recognize the facts cf the existing con- 
ditions that surround them. In proportion as we have been successful 
in doing that we have created a political party. We are so distinctly 
an organization that neither of the other parties likes us any more than 
the devil is reported to like holy water. That is the reason why the 
press of this city reviles us and calls myself and colleagues gate-money 
men, and tries to take our character from us and our means of sub- 
sistence. 

Mr. Dickey. What do you mean by gate-money men ? 

Mr. Morgan. You, as members of Congress and as men who have 
participated in political life, know that politics cannot be carried on 
without money. The socialists have found that out too, and the only 
way that they can get money is by passing the hat around at assemblies, 
and by holding picnics, charging 25 cents admission, and getting the 
difference between the actual cost of a glass of beer and the price that 
they se)l it for. Iu that manner we have been able to carry on our 
political campaign without asking anybody to give us money. It has 
been done by volunteer contributions and by the receipts from picnics 



140 DEPRESSION IN LABOR AND BUSINESS. 

and festivals that we have organized. That is what the papers mean 
by calling us gate-money men. We made $3,000 last June twelve 
months, and on that money we started a newspaper and have beeti car- 
rying it on for nearly a year, but it has been rather an unsuccessful 
investment. 

Mr. Sherwin. You said that the socialistic movement arose on ac- 
count of the depression of labor. 

Mr. Morgan. No, sir. The socialistic movement started some twenty 
years ago in Germany. One of the foremost advocates of socialism was 
Ferdinand Lassalle. 

Mr. Sherwin. I understood you to say that socialism had been of 
short duration, and that the reason of it was the depression of labor. 

Mr. Morgan. There was an indefinite something in the minds of the 
working people at large — a feeling that something was wrong — but the 
socialistic agitators and the schools of socialism fixed that indefinite 
something and directed their attention to where the wrong existed. 

Mr. Sherwin. What was that something? 

Mr. Morgan. The something was the showing to the working classes 
in proper plain terms the causes that led to their condition. 

Mr. Sherwin. What condition ? 

Mr. Morgan. The condition in which they exist to-day. 

Mr. Sherwin. What do you call their condition ? 

Mr. Morgan. The most miserable and degrading condition. 

Mr. Sherwin. And if there had been no depression, there would 
have been no need of socialism ? 

Mr. Morgan. Not necessarily. 

The Chairman. Our mission of inquiry is as to tbe causes of the great 
distress in the country, and especially of the depression of labor. We 
are not here to inquire whether that exists or not. Congress has told 
us that it does exist. We are here to inquire into its present condition 
and into its causes, and whether there is a remedy for it. That is our 
mission. If you have any connected statement to make to us covering 
that question, you can make it. 

Mr. Morgan. That was the position which I took when I placed my- 
self before the committee. It was that the depression was already ad- 
mitted. Hence I do not propose to go into the question of its existence. 
I desire, however, to lay before the committee the causes of the depres- 
sion in labor. 

The cause of the present labor depression can only be arrived at intel- 
ligently, and with any degree of certainty, by a thorough investigation 
and knowledge of the principles upon which the industrial and com- 
mercial system is based and the details of its operations. 

I desire to have it understood that my knowledge of the details of 
the system is imperfect, to a large extent, but of the fundamental prin- 
ciples and the most important details I believe I possess a fair under- 
standing; hence my presence here as a labor reformer. 

My statement of the cause of the present labor depression is as fol- 
lows: 

Since the abolition of the feudal and chattel slavery systems, all in- 
dustry and commerce has been carried on under the free competitive 
system ; or, in other words, more forcible perhaps than polite, it has 
been, every one for himself and herself, and the devil take the hindmost. 
The principal incentive and controlling influence under this system is 
self-interest; the interests of the people, State, or nation, are as naught. 
It must be self first, last, and always, if success is desired, and " after 
us the deluge." 



DEPRESSION IN LABOR AND BUSINESS. 141 

The prize to be secured in this competitive straggle is Food, Shelter, 
Intelligence, Leisure, Wealth, and Life. Nature has provided the raw 
materials in abundance, and, with Labor, Wealth can be created and life 
secured; but in this scramble for wealth and life, only a few can or 
have secured that which all desire and a part of which all must have. 
Hence, the few having secured all, they have become masters, while 
those last in the race, all of the hindmost, have become the dependents 
and slaves of those who have secured the prize, and these dependents 
are compelled to do their masters' bidding and pleasure, and in return 
receive for their labor the commonest necessaries of life. 

In the past the most potent element of success was Physical Force, 
butas the resources of nature have been developed and intelligence in- 
creased, the iron baud of physical force has been gradually covered with 
the velvet glove, and to-day physical force always, if possible, is kept in 
the background, and intelligence and cunning are substituted. 

Those who are successful in the scramble to day have just as much of 
the natural resources of life, and have at their command as many slaves 
as ever the robber barons of the past had, and to secure the results of 
their success, instead of mountain strongholds, moated castles, and 
armed retainers, they feed the people with mental chaff, political sophis- 
try, and false economy, erect legislative halls and fill them with law- 
yers. 

The position that the unsuccessful competitors occupied iu the past 
was like that of the horse or ass; they were fed, clothed, and sheltered 
in return tor their services ; but to-day the relations that exist between 
master and man are regulated by the "wages system." We must now 
seek employment from those who have possession of the means of labor, 
and no matter how earnestly we may desire to secure work that we may 
live, we have no right under the law to demand that we shall be em- 
ployed, though our lives ami the lives of our families may depend upon 
our securing it. When employment is secured, in return for our serv- 
ices we receive wages not proportionate to the number of hours' toil, or 
the amount of work produced, but based upon the one necessity or 
standard of living, and no other arrangement is possible under the com* 
petitive system. Hence no permanent improvement in the condition of 
the working classes can not only not be expected, but their present de- 
pressed condition will inevitably be intensified until the system has 
forced human endurance to its limits. 

To properly understand this, we must be somewhat familiar with the 
details as well as the principles of tiiis industrial s. stern. Before the 
present era of labor-saving, machinery, the methods of production were 
so crude that to supply the commonest necessaries of life required the 
constant labor of all. There was comparatively uo division of labor, 
everything being of home manufacture; there was none or but little 
exchange of produets, because the means of communication and trans- 
portation were as crude, as the methods of production. 

While this state continued the necessities of life or the standard of 
living of the producer was proportionate to his productive power, hence 
the constant employment of all was required. • 

But to day we find ourselves in the midst of a universal system of 
production and exchange, confined to no nation, couutry, people, or 
race. Electricity has annihilated time, and steam has made distance as 
nothing in the competitive struggle. 

The home market for home-made production has been destroyed, the 
contest for industiial and commercial supremecy has been removed from 
the village to the State, from the State to the nation, aud from the na- 



142 DEPKESSION IN LABOR AND BUSINESS. 

tion to the world at large. All industrial production upon which any 
nation may hope for success has become international. In this inter- 
national struggle all friendly rivalry has been eliminated, and it has be- 
come a struggle for existence. 

There are many factors in this desperate fight that operate to give 
success or defeat to the contestants, such as locality, climate, and nat- 
ural abundance of raw materials, or natural wealth. But the most po- 
tent of all is intelligent, shrewd direction of labor and the ability of the 
worker to produce much and consume little. A standard of living for 
the producer, proportionate to his productive power of to day, would 
be dear, and dearnesa, under the competitive system, means ruin, and 
ruin means death. Cheap production means success, and if the theory 
of the survival of the fittest be correct, Yankee employers and Chinese 
laborers are destined to survive. For the nation of people that can live 
most cheaply and maintain an average productive power will in the fu- 
ture, to a lar greater extent than in the past, control the markets of the 
world, and the development of the competitive system will bring all 
others down to their level. 

This factor of cheapness has in the past, and to some extent in 
the present, been secured by the exclusive possession of rich, natural 
abundance of raw materials and labor saving machinery, as in England. 
But labor-saving machinery is now in use everywhere, and an abund- 
ance of raw materials have been discovered all over the world. So that 
the remaining most important element in the competitive strife is the 
standard of living of the workers; this, and only this, is the controlling 
influence in the regulation of wages, and the lower this standard of liv- 
ing can be reduced the greater certainty of being able to undersell all 
competitors ; and thus, while the power of the worker to produce is most 
wonderfully increased, the operations and requirements of the compet- 
itive system not only prevents a permanent and proportionate rise in 
the standard of living of the producers, but requires a reduction to the 
lowest possible limit. 

In the establishment of the present system of industry the assistance 
and co operation of a vast number of workers was required, all the gi- 
gantic changes had to be commenced with the crude and imperfect tools 
and methods of the past, and the most effective of all tools was human 
muscle. Hence, the demand for and employment of labor at such terms 
as enabled the worker to share to a certain extent in the progress made ; 
a higher standard of living, new habits and modes of thought were es- 
tablished, new wants and desires were created, and a belief in the pos- 
sibility of a higher and better physical and intellectual civilization formed. 
But for some time past the. rough work of erecting the industrial and 
commercial system of the 19th century has been completed. At pres- 
ent, and in the iuture, the work to be done is that ot simplifying and 
perfecting its operations, and the elimination of ail manual labor. 

The demand for human muscle and skill has and will rapidly decrease. 
The rudely-made labor saving machine made by hand has been used to 
make more perfect labor-saving machines, and now machine-made ma- 
chines are more and more rapidly replacing human labor; and in the 
near future the automatic machine and the development of electrical 
and other inexhaustible natural forces will render the labor of man un- 
necessary ; and the maintenance of the productive and distributive sys- 
tem will, comparatively speaking, require the help of the worker no 
more. 

This displacement of labor and its degrading influence has been felt 
for years past by the most intelligent and shrewd among the workers; 



DEPRESSION IN LABOR AND BUSINESS*. 143 

they left the ranks of the producers in vast numbers and joined the non- 
producers ; the no n- producers I refer to are that class that stand be- 
tween the different producers and levy tribute upon all that is produced — 
professional politicians, agents, speculators, lawyers, stock gamblers, 
and a host of others. 

And after these come the wholesale and retail traders. But the ne- 
cessity for cheapness, the consequent competition, and the developments 
of the system act here as elsewhere, and these avenues of escape, like 
all others, are being rapidly closed, and their inhabitants forced back 
into the ever-increasing ranks of the unemployed. For as industrial 
home manufacturers were absorbed by the factory, and as the small fac- 
tories were being and will be absorbed by the gigantic manufacturing 
institutions of the present and the future, so will it be with the great 
middle class of traders ; every branch of trade will be concentrated with 
resistless force, and the individual trader, like the individual producer, 
will be absorbed by the great trading institutions, now so rapidly being 
organized. Small railroad owners and directors will become the ser- 
vants and employes of the Vanderbilts and Scotts. The commission 
merchants and members of the board of trade will become the team- 
sters and dock laborers, occasionally employed by the great transpor- 
tation and distribution companies. The dry-goods merchants will be- 
come the clerks and salesmen of the Stewarts and Field & Leiters. 

The lawyers will become the mere copyists and messengers of the large 
legal firms, and the copyists and messengers in turn will be rendered 
unnecessary by the chemical or mechanical copying-machines and the 
telephone. 

The labor of the worker being no longer needed, and the chance of 
living as a non producer being limited exclusively to the few, what will 
be the result? Will the mass of people submit to be enslaved by abject 
poverty i Can they suppress the yearnings, the wants and desires that 
have been created in the past, and intensified in the present, by the 
enormous natural and artificial wealth surrounding them on every side? 
Will they not accept the fact, now so rapidly making itself known, that, 
now the drudgery of production has been taken from them and is being 
done by inanimate and tireless machinery and natural force, their 
future occupation is to consume, use, and enjoy the bountiful productions 
of nature and the ingenuity of the human mind ? And if they be denied 
this most natural right, they will stretch forth their hands and take by 
force that which constitutes the right to life, the natural resources of the 
earth and the means of labor. 

To briefly sum up this statement : 

The effects and results of this principle of free competition are as 
follows: 

1. The individual interest is placed above and separated from the in- 
terests of the people. 

2. The success of the individual is of the first importance. Hence 
every means must, and will, be used to secure that success. 

3. Success is measured by the difference between extreme wealth and 
extreme poverty, and hejace depends upon some being rich and others 
poor. And hence every man that desires to succeed seeks to obtain 
the wealth of others, no matter whether it be labor power, accumulated 
results of labor, or natural wealth. 

4. This places every man in antagonism with every other man, creates 
classes of different degrees of wealth ; this creates class antagonisms, 
leads to sectional and national antagonism and murderous coufiicts. 

5. It suppresses all the better sentiments and aspirations of human 



144 DEPRESSION IN LABOR AND BUSINESS. 

nature, and develops all that is evil and destructive; it makes the laborer 
a brute, possessed of all the animal passions, but lacking a brute's in- 
telligence; makes the business man a hypocrite, cheat, gambler, and 
t lief, and the capitalist a remorseless despot, caring naught for the 
sacrifice of hopes,* desires, health, and lives of those ministering to or 
standing in the way of his success. 

G. It fathers immorality; offers a premium to crime ; destroys the holi- 
est ties of home lite, both in the hovel and the palace; it fills our legislative 
bodies and positions of trust with scheming and unscrupulous men, 
whose every act is regulated, not by the wants and interests of the peo- 
ple, but by the desire for individual success. 

7. It places in the hands of a few all the wealth of the world, disin- 
herits and impoverishes the millions, and produces famine and starvation 
in the midst of abundance, and will finally end in either evolution or 
revolution and bloodshed. 

That, gentlemen, is thedoctrine that has been taught in Chicago. That 
is the doctrine that has built up without money, without time, withouted- 
ucatiou, without anything that has been used in the past to build up par- 
ties, a p irty of 12,000 votes in Chicago. It is operating not only in 
Chicago, but I guess through the United States and over the water — 
everywhere that any intelligence exists. That is the standpoint of the 
socialists. The cause of the depression is the fact that man can produce 
three or four or five or six times more than he is allowed to consume. 

The Chairman. You have given the reason which, in your judgment, 
has produced the disaster, but you have not furnished us yet with your 
idea as to the remedy, so far as legislative power is concerned. 

Mr. Morgan. No, sir. 

The Chairman, Please to state it. 

Mr. Morgan. Any person who studies the facts laid down can tell at 
once, or pretty nearly, what they will result in. A competitive system has 
been, in my opinion, necessary in the past. It grew out of the dark ages, 
and is growing towards still more light. Just as the little factory is ab- 
sorbed in the large factory, and the large factory is absorbed into a joint- 
stock corporation, so all the small trading is absorbed into the large trans- 
portation and competitive companies ; and in the future, just as the small 
retail dialers are absorbed by the Stewarts and the Fields, so all the rail- 
roads are being gradually concentrated under the command of tueVan- 
derbilts and the Seotts. Anybody who directs his attention to this tend- 
ency of things may perceive, what the ultimate result will be. Those men 
who have the power and intelligence to take advantage of the competi- 
tive system and to concentrate all business into a small space, compara- 
tively speaking, will have the monopoly of manufactures, transportation, 
and distribution. They are acting.only for self, and as the interest of self 
is above the interest of the people, the consequence will be that in. every 
branch of business and industry they will be in the future the same as it 
is to-day with the railroads. The railroads are an outgrowth of the com- 
petitive system. The fruit has become nearly ripe, not quite, for the great 
railroad monopolies. Vanderbilt and Gould and Scott have got to do 
some snore good work yet, and then the fruit, will be ripe. Then the 
question will be, who will run this country — Scott, Vanderbilt, and Gould, 
or the people. Then it will be found out that the country must be run 
by the people, and that it will be absolutely necessary for the govern- 
ment to control the avenues through which the life blood of the nation 
passes. It will be the same with the telegraph system, and in the course 
of a few years it will be the same with the industrial system. You can 
see in Chicago or any industrial place that the small manufacturers are 



DEPRESSION IN LABOR AND BUSINESS. 145 

either eking oat a mean, miserable existence, or have gone out of exist- 
ence altogether and have gone to work for large institutions. Hence 
it is only a question of time as to when production, transportation, and 
distribution will have to be carried on in the same manner as the post- 
office system is carried on. The post-office system which can carry a 
letter for me will also carry a small parcel for me ; and if it can carry a 
small parcel for me it can carry a trunk for me; it can carry my house- 
hold furniture or anything else that I need to have transported, aud can 
carry it for cost, because the system belongs to the people. 

A few weeks ago the commission men on an adjacent street were all 
put into a flutter of excitement from information which they received, 
that the American Express Company, which has 30,000 agents scattered 
throughout the country, had issued to its agents a circular directing them 
to hold out all kinds of inducements to the farmers to send their produce to 
the American Express Company, with the condition that those products 
would be marketed and the proceeds returned to the producers for the 
mere cost of transportation. The Board of Trade men here felt just as 
the operatives in a factory feel when a new machine is invented that does 
the labor which it required all the men iu the shop to do. The commis- 
sion merchants met in solemn conclave and protested against the act of 
the American Express Company. They said that it was outrageous to 
them, and that if the plan was carried out, they would have to go and 
drive wagons for tne American Express Company. But the carrying 
out of such a plan is only a questiou of time. 

Mr. Dickey. I understand you to claim that all the difficulties which 
we are laboring under grow out of the competitive system"? 

Mr. Morgan. Certainly. 

Mr. Dickey. That competitive system, you say, is based upon self- 
ishness? 

Mr. Morgan. Certainly; but it has grown out of necessity. The 
further we progress in what we call civilization, the more selfishness we 
find. 

Mr. Dickey. Can you suggest legislation to cure the nature of man 
and change that selfishness? 

Mr. Morgan. Yes. If you will put me in a position where 1 can earn 
the means of living without its being absolutely necessary for me to cut 
the throat of my fellow-workman to get it, then I have no need to use 
selfishness. The conditions of such a change would be such as to bring- 
out the best sentiments of nature instead of the worst ones. Society 
today is big with change, and, like a woman with child, it will be 
worse before it is better. We must either relapse into the old condition 
of affairs, or grow out of it into a better one. The change from chattel 
slavery in the South was not brought about without much blood, woe, 
and misery, and you do not expect that society to-day, laboring as it is 
with comiug events and great changes, can have these effects brought 
out iu peace altogether. 

Mr. Dickey. You do not suggest any measures of legislation for 
relief. 

Mr. Morgan. Certainly, I will. 

Mr. Dickey. What are they? 

Mr. Morgan. The first thing is to prevent the fall development of the 
present system in its effects on workingmeu. How can that be done? 
By giving them all a chance to receive some part of that which they 
produce, by distributing among them some of the products of their 
labor. Wages are not regulated by the number of hours that a man 
works, nor by the amount of labor, nor by the amount of his products, 
H. Mis. 5 10 



146 DEPRESSION IN LABOR AND BUSINESS. 

but by the necessities of life. Today the average time of labor is ten 
hours, and the Chicago Tribune says that that is right. 

Mr. Dickey. Would you have the legislation of the country fix the 
number of hours that men should work and fix the amount of their 
wages 1 

Mr. Morgan. Labor is not remunerated in proportion to the number 
of hours worked, but on the basis of what it takes to supply the animal 
nature of man. Hence it is not because a man works ten hours a day 
that he gets $1.50. It is simply because he can live on $1.50 a day. 
The first thiug is to reduce the hours of labor in every possible w r ay. 
It cannot be done generally. That is impossible. But there are ways 
and means whereby the legislation of Congress can reduce the hours of 
labor. Legislation can reduce the hours of labor in all municipal, State, 
county, and national works. It can reduce the hours of labor in all 
monopolies that have special privileges and charters. A reduction of 
the hours of labor can be enforced in every business that is not of a 
competitive nature. But as soon as you attempt to interfere with busi- 
ness that is of a competitive nature, then you ruin the men that are 
engaged in it, except the system is adopted in so broad a manner as to 
include all competitive business. This is the first point. We ask for it 
simply to give time for the coming change. We ask you also to make the 
system of education national instead of local. We want the public schools 
in the interest of the people, and we want them placed where they are 
needed. We do not want them controlled either by sectarianism or by 
the local influences that at present surround them. We do not want, for 
instance, to have five or six schools in the fourth ward where there are 
23,000 people, and only three or four schools in the fifth ward where there 
are 45,000 people. In addition to this national system of education, we 
want the prohibition of child labor, so that children can go to school 
instead of going to the workshops. And what we want above all other 
things after those, is reliable information in regard to business and labor. 
W"e want such information as we workingmen, members of the trades' 
council, as well as socialists, tried to place before you last night. That 
information was not perfect, but we were not to blame for that. We 
want the State and the nation to give us facts and figures that are 
reliable, because they have the means of doing so while we have not. 
These are the only remedies that can be applied by the United States 
Congress. Such remedies as the abolition of convict labor can be ap- 
plied by the State legislatures. 

The Chairman. State whether, in your judgment, the eight-hour law 
is a judicious law or not. 

Mr. Morgan. Most decidedly it is, above all other things; but there 
are some advocates of the eight-hour law here with whom I disagree 
and who disagree with me. 

The Chairman. Have yon any clear idea in your mind as to a remedy 
for the evils you speak of, and as to how Congress may provide a remedy % 

Mr. Morgan. Yes, sir; very distinct. These measures which I have 
indicated, education, the eight-hour law, &c, are ameliatory measures. 
They are not corrective. Here are the corrective measures. The in- 
terests of the people themselves have compelled, I think, to a certain 
extent, the development of the competitive system. For instance, when 
a man's house is on fire, he does not summon contractors and ask them 
to make a bid to put the fire out. His only desire is to put the fire out 
first; and the people do that through the fire department. So, too, with 
the water department. It is necessary for every inhabitant to have a 
sufficient supply of water, and it would not do to have competition in 



DEPRESSION IN LABOR AND BUSINESS. 147 

that matter. Hence the people supply themselves with water at cost, 
just the same as they put out fires at cost. It is the same way with the 
public school system. The interests of the people were above the in- 
terests £>f the individuals who ran the private schools, and hence the 
States see to education. In the same way we want transportation car- 
ried on by the people at cost. The capitalists' papers that howl against 
us for this kind of thing say that the postal system must be maintained 
at all hazards, and yet they condemn us for wishing to extend that sys- 
tem to general transportation. If a proposition was made to-day to our 
city couucil to give the water-works into the hands of a private corpor- 
ation or to abolish the tire department, the city would not hold the man 
who made the proposition. The next thing that will be regarded as 
absolutely necessary for the people will be that the railroads shall be 
controlled by them. The socialistic agitation may help in directing the 
attention of the people to that subject, but Congress itself will find that 
the enormous power exercised by the railroad corporations, both in lo- 
cal, State, and national bodies, is so great, that, as a matter of self-pres- 
ervation, they must be deprived of it, and hence one of the first thiugs 
for the national Congress to<lo (after giving us these ameliatory measures) 
is to take the railroads, and after that to take the telegraph system. 

The Chairman. Would you have the nation become tlie owner of the 
railroads and telegraphs of the country % 

Mr. Morgan. Certainly, just the same as the nation is the owner of 
the post office system. In England the government took control of the 
telegraph system because the previous owners were charging such enor- 
mous rates that the telegraph was found to be useful only to a few of 
the people. The government purchased the lines, and then the tele- 
graph was made a national institution. 

The Chairman. And the governments in France and Germany took 
control of the railroads ? 

Mr. Morgan. Yes; at first in England the working of the telegraph 
system by the government cost some 300,000 pounds over and above the 
revenue of the first year, but since then the telegraph system has pro- 
duced a revenue to the government. 

The Chairman. If our government should become the owner of the 
railroads and of the telegraph and of other branches of industry, in 
what way would that benefit the laboring man? It would only trans- 
fer the ownership of all these properties from associations of men and 
vest the title in the people at large. How is labor to be benefited by 
that change of ownership % 

Mr. Morgan. It would be benefited in this way: I want it distinctly 
understood that my view of the government is that the government is 
the people. Some of the railroad companies make profit and some of 
them do not ; but, taking it all in all, the railroad business is a paying 
business, and last year dividends to the amount of sixty millions of dol- 
lars were divided among railroad stockholders. Now, if the railroads 
had been in the hands of the people, the people would have been bene- 
fited that sixty millions of dollars. ' 

The Chairman. You mean the government. 

Mr. Morgan. No, I mean the people; for this reason, that instead of 
the railroads charging so high as to make that profit of sixty mill- 
ions of dollars, the rates of freight and transportation would have 
been reduced to cost, the same as letter postage is, aud hence the profit 
made by the railroad companies on transportation would have remained 
in the pockets of the people. 



148 DEPRESSION IN LABOE AND BUSINESS. 

Mr. Cowgill. Would Dot that profit have accrued to the producer, 
and not to the ordinary laboring man in the community! 

Mr. Morgan. It would have accrued to the producer, but whatever 
accrues to the producer accrues to the laboring man, for he is the pro- 
ducer. A man said last year, " I am opposed to the railroads going 
into the hands of the government, because," he said, "is not the post- 
office system used now by the Republican party tor political purposes'? 
Are not its employes coerced to vote the Republican ticket, aud hence 
to perpetuate Republican rule in this country V One of the gentlemen 
present stated that the Republican party did not do anything of the 
kind. But, even if it did, what is the difference? How is it, that an 
employe of the Post Office Department can be coerced ? Simply because 
the post-office is a better job than any job he can get outside of it, and he 
sacrifices his vote for a good job. Now, where is the difference % I work 
in a shop, and my employer sees fit to put on the pressure, just the 
same as the Republican party puts on the pressure on post-office em- 
ployes. The post-office employe would sacrifice his vote for $75 a 
mouth, and I would sacrifice my vote for perhaps $50 a month. Now, 
what is the difference'? 

The Chairman. The post-office is not a self-supporting institution; 
so your argument would not apply to that, while it does apply to the 
railroads that divide sixty millions a year in dividends. 

Mr. Morgan. Is it because of the fundamental principle on which 
the post-office is run that it does not pay % The fundamental principle 
on which it is run is the cost of the service, and if the service costs 
more than it should cost, it is not the principle that is wrong but it is 
the men who put the principle into operation that are wrong. 

The Chairman. The amount paid to the railroads for carrying the 
mails impoverishes the post office, because the railroad companies are 
j>aid monstrous prices for the transportation of the mails. 

Mr. Morgan. Then you must realize at once that it is in the interest 
of the post-office system and in the interest of the people that the rail- 
roads should be taken by the government, because the mails pass over 
them, and it is not right that private individuals should have the right 
to stop the passage of the government mails whenever they see fit. 

Mr. Martin. Would you have the government buy all the railroads 
in the country and pay for them? 

Mr. Morgan. Certainly. 

Mr. Martin. How would the government get the money % 

Mr. Morgan. The same as the English Government got the money 
for the purchase of the telegraph system. The government can get the 
railroads in exactly the same way as the companies got them. The 
Union Pacific Railroad was built out of nothing, and perhaps it can be 
had for nothing. The government gave to the corporations that built 
the Pacific railroads, forty- seven million acres of land, besides money 
enough to build and equip the roads in every particular, and eleven mil- 
lions over and above that. The government gave these companies the 
land and the bonds, and the companies promised to pay back the bonds 
at, some future time. The government can take the Pacific railroads 
and pay the indebtedness to the men who own them, in time, just as the 
railroad stockholders intend to pay the government in course of time. 
Is not that fair ? 

Mr. Sherwin. Your object in doing away with the competitive sys- 
tem is to make property really common among the people % 

Mr. Morgan. Excuse me. When you say my object in doing away 
with the competitive system is so and so, you misrepresent me. I say 



DEPEESSION IN LABOR AND BUSINESS. 149 

that as soon as tbe institutions that grew up under the competitive sys- 
tem get ripe, the people should take there*. 

Mr. Sherwin. You have been prophesying a time which you say 
must arrive in some way, either by revolution or otherwise? 

Mr. Morgan. Yes. 

Mr. Sherwin. You think that the change must arrive by revolution ! 

Mr. Morgan. I believe so. 

Mr. Sherwin. Is that part of the teachings of the socialists — that 
the change must come by revolution, if in no other way? 

Mr. Morgan. I say it must come either by evolution or by revolu- 
tion. 

Mr. Sherwin. The tendency is still against your proposition ? 

Mr. Morgan. The tendency is still for revolution instead of evolu- 
tion. 

Mr. Sherwin. Would you extend this method of government control 
to all classes of business ? 

Mr. Morgan. Certainly. 

Mr. Sherwin. You would extend it to farming as well as to boot and 
shoe making, and to railroading and shipping, &c. ? 

Mr. Morgan. I beg leave to be allowed to answer the question in 
my own way. If I answer your question yes or no, it may be that the 
answer would be wrong. 

Mr. Sherwin. I wish to get at the point and be done with it. An- 
swer the question. 

Mr. Morgan. We class the thing like this — production and distribu- 
tion. That is all that there is iu it. We say that all production should 
be in the hands of the people, because the real things produced from the 
earth and machinery should go to the people, and we say that transpor- 
tation should be on the same system as the post-office system. 

Mr. Sherwin. How would the government get the men to run the 
railroads"? 

Mr. Morgan. The same as it gets the men to run the post-office. 

Mr. Sherwin. Hire them? 

Mr. Morgan. Hire them until other arrangements are made. 

Mr. Sherwin. What other arrangements could be made? 

Mr. Morgan. When production and distribution are in the hands of 
the people, things will be so arranged in detail that there will be no one 
to hire and no one to be hired. 

Mr. Shurwin. Suppose a man refuses to work? 

Mr. Morgan. Then he^canuot live. 

Mr. Sherwin. Why? 

Mr. Morgan. Because under the co-operative system which this leads 
into, the means of labor and the resources of life will be in the hands 
of every man to 5e used, and, if he refuses to use them, he dies, as he 
ought to die. 

Mr. Sherwin. I understand that one of the objects of socialism is to 
equalize fortunes, so that one man shall not be the slave of another 
man. It makes no difference what a man's capacity for work is, he is 
entitled to a living from society, is he not? 

Mr. Morgan. Certainly. 

Mr. Sherwin. Supposing that, when this government gets control of 
all the business of the country, one third of the men refuse to work, 
are they still entitled to a living? 

Mr. Morgan. Yes. 

Mr. Sherwin. Then the other two thirds are to work and support the 
°ne-third who will not work? 



150 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Morgan. Yes ; but allow me to state that such a thing could not 
possibly occur, for this reason, that there being no employers but only 
directors, there certainly cannot be any necessity for men to refuse to 
work except their natures are such that they would not do it out of 
natural spite; hence, if they refuse to work they could not live. 

Mr. Sherwin. Do men work now for the love of work ! 

Mr. Morgan. Certainly not, under the present condition of things. 

Mr. Sherwin. In your opinion, would a man, so long as he is a man, 
work for the love of work % 

Mr. Morgan. He would work sufficiently to get him all the luxuries 
of life. 

Mr. Sherwin. What would be the need of his working if the govern- 
ment would furnish him with what he wants, even though he does not 
work ? 

Mr. Morgan. We do not propose that, and hence the necessity can- 
not arise. 

Mr. Sherwin. You say that every man must have a living. 

Mr. Morgan. Must have the chance to get a living. 

Mr. Sherwin. Every man has the chance to get a living now. 

Mr. Morgan. He has not anything of the kind. What are tramp 
laws passed for? 

Mr. Sherwin. You contend that government would find men enough 
to do all the work, and that men would come in voluntarily to do the 
work ? 

Mr. Morgan. Certainly. 

Mr. Sherwin. At the same time you have given it as your opinion 
that the time is coining when no man will work, but that all work will 
be done by machinery ? 

Mr. Morgan. I said that the time is coming when, comparatively 
speaking, the work of men would be required no more. 

Mr. Sherwin. We want no vague prophecies. You talked about rev- 
olution. 

Mr. Morgan. You took up the prophecy and argued from that stand- 
point. 

Mr. Sherwin. We want to find out just what we are going into — 
whether two men who are perfectly willing to work under a certain state 
of things shall support another man who is not willing to work. 

Mr. Morgan. 1 did not state anything of the kind. 

Mr. Sherwin. You state, however, that the. man who is not willing 
to work is entitled to his living at all events. 

Mr. Morgan. He is entitled to the means of living. He is entitled 
to the means wherebv he can provide himself with the necessaries of 
life. 

Mr. Sherwin. How is the government to force men to labor? 

Mr. Morgan. I desire to state my points clearly, not to have answers 
forced into my mouth. You say that I said that the government should 
supply every man with the means of living. I said nothing of the kind. 
No socialist says anything of the kind. We say that under a proper 
arrangement of society the means of a livelihood should be within the 
reach of every man, and that every man should have the chance of living. 

Mr. Sherwin. But the remedy that you have proposed is that govern- 
ment should run all kinds of business. 

Mr. Morgan. Certainly, and the government means the people. 

Mr. Sherwin. If the government runs all kinds of business, then 
there will be no room for individual competition, and no need for any man 
working. 



DEPRESSION IN LABOR AND BUSINESS* 151 

Mr. Morgan. There will be all the room necessary for individual com- 
petition bat the competition would be of a. different kind. It would be 
the competition of every man to do something whereby the interests of 
the whole people would be advanced. 

Mr Sherwin. What is the object of competition to-day ? 

Mr Morgan. The object of competition to-day is to have the means 
of existence. 

Mr. Sherwin. What would it be then ? 

Mr. Morgan. The object of competition would be, then, to raise the 
people to a higher state of civilization than they have ever known be- 
fore. 

Mr. Sherwin. That is very vague. 

Mr. Morgan. Here is Mr. Tyndall and many other scientific men who 
can be mentioned, who are to-day devoting their entire lives to research 
in science for the benefit of mankind. There is competition. Compe- 
tition under the system I speak of would be for the benefit of the peo- 
ple, and for the approbation which would follow from one man being 
more skillful and more intelligent than another. 

Mr. Sherwin. Suppose that by this means a man amassed a fortune, 
would you let him have the privilege of enjoying that fortune? 

Mr. Morgan. I would leave him to the enjoyment of his fortune. 

Mr. Sherwin. Is not that what is done now in society ? 

Mr. Morgan. No, sir; here is the difference; in the cooperative sys- 
tem that we speak of, if a man's intelligence and ability give him the 
power to make a fortuue he should enjoy it to the farthest limit. 

Mr. Sherwin. I am glad to hear you say so. 

Mr. Morgan. But he should not be allowed to use it to take advan- 
tage of another man, the same as he is allowed to do to-day ? 

Mr. Sherwin. How would he enjoy it without taking advantage of 
another man ? Suppose that he wanted to go to South Park, in the 
suburbs of Chicago, how would he go? 

Mr. Morgan. Drive himself. A man who would not drive himself 
ought not to ride. If a fortune only gives a man pleasure because he 
can hire another man aud put him in front of his carriage as his menial, 
such a fortune ought to be put out of existence. 

Mr. Sherwin. Suppose two men went into business, and at the end 
of the year one man, by getting up early and sitting up late, and by 
not drinking, had saved $500, while the other man was $100 in debt, 
would you have the man who had saved the $500 pay the debt of the 
other man ? 

Mr. Morgan. You are falling into the same mistake that the majority 
of people who discuss matters superficially fall into. You are trying to 
argue from the present condition of society ; such, things cannot be as- 
sumed to exist in the other condition of society. 

Mr. Sherwin. Suppose that, after the government has assumed the 
control of all the railroads, it does not find men enough to run the 
trains, how are the trains to be run % 

Mr. Morgan. By putting steam to them ; that is easy enough. 

Mr. Sherwin. Would there not have to be power in the government 
somewhere to force men to work ? 

Mr. Morgan. No, sir ; what forces men to work now J ? 

Mr. Sherwin. A desire to get a living, I suppose. 

Mr. Morgan. It does not require government to force them to go to 
work. 

Mr. Sherwin. What is the best method of developing a real manly 
character % 



152 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Morgan. By giving a man an education and the right to use the 
opportunities that are around him; by giving him, when. he is old enough, 
a deceut place to live and a few hours of leisure, and not forcing him 
into a factory ten hours of the day. 

Mr. Sherwin. You would have society give you a good house to 
live in? 

Mr. Morgan. The reason that workingmen live in hovels today, and 
that they are kept in factories for ten hours, is that we do not have a 
chance to enjoy the results of our labor. But under a co-operative 
system where we will have a chance to enjoy the results of our labor, 
and where we will get back an equivalent lor the work that we do, then 
we will have a chance to have good homes. 

Mr. Sherwin. What is to prevent you and a dozen men co-operat- 
ing and going into business for yourselves ? 

Mr. Morgan. I will tell you what has prevented the success of all co- 
operative institutions so far, comparatively speaking. You cannot make 
a tree grow unless you plant it in proper soil. What do you do in 
starting a co-operative society to-day % You simply intensify the com- 
petitive system. Here is an illustration. The cabinet makers were on 
a strike for eight hours, and they proposed to establish a co-operative 
factory. One of them asked me to come and speak at his meeting last 
Saturday e veiling. I told him that from my standpoint I would per- 
haps disagree with him, and that the result to be derived from the co- 
operative factory would be perhaps to benefit the condition of its mem- 
bers, but to make the condition of the workmen in other shops worse. 
Why % The success of the co operative shop depends on the same prin- 
ciple as the success of all other shops depends upon, that is, the cheap- 
ness at which it produces its goods. Hence, to get trade, the co-opera- 
tive factory must undersell the others, and the result of that is to make 
other employers cut down the wages of their laboring men. 

Mr. Sherwin. Then that kind of co-operative system would not work 
well, but you think that the government co-operative system would % 

Mr. Morgan. That is it. 

Mr. Sherwin. If the whole government were a co-operative machine, 
and if all commodities were produced by the government, where would 
be the market for them % 

Mr. Morgan. In the wants and desires of the people. 

Mr. Sherwin. Then the government would produce just what the 
people wanted and nothing more? 

Mr. Morgan. Yes. 

Mr. Sherwin. The people would want a good deal more than they 
now do, and therefore they would have to work a good deal more 1 ? 

Mr. Morgan. They would have more and work less. 

Mr. Sherwjn. And how would you have the money managed % 

Mr. Morgan. It is pretty hard to go into details of what a future sys- 
tem should be when we see a committee of Congress that cannot tell us 
what is the matter. 

Mr. Sherwin. Your idea is that the government should be the great 
producer and distributor % 

Mr. Morgan. Yes. 

Mr. Sherwin. And that there should be no competition 1 

Mr. Morgan. Stop a minute. 

Mr. Sherwin. You would have a system in which men should work 
for the love of work % 

Mr. Morgan. Certainly. 



DEPRESSION IN LABOR AND BUSINESS. 153 

Mr. Sherwin. And if they did not love work and did not desire it, 
they should have their living anyhow, from those who do love work "I 

Mr. Morgan. jSo, sir; I do not propose to work for anybody it* I can 
help it. I am obliged to do so now, but you could not get me to do so 
under the co-operative system. 

Yieics of Mr. George A. Schilling. 

Mr. George A. Schilling came before the committee as a volunteer 
witness. He said : I am a resident of Chicago. I am a cooper by trade. 
I have been here since the fall of 1875. I propose to read to the com- 
mittee the preamble and declaration of principles of the socialists. So 
far as the platform is concerned, it is of a dual nature. One part is the 
declaration of principles and the other part a platform of measures em- 
bodying the socialistic state, or that which we are aiming at in the 
future. The platform embodies such measures as we expect, if possible, 
to get through the present existing condition of society before it dies. 
This platform was adopted two years ago in a national congress of the 
party in this country, and is almost verbatim the same as has been 
adopted by all the socialistic organizations in Europe. The platform is 
as follows : 

PLATFOEM OF THE SOCIALISTIC LABOR PARTY. 

Labor being ibe source of all wealth and civilization, and useful labor being possible 
only by and through the associated efforts of the people, the means of labor should, 
therefore, in all justice, belong to society. 

The system under which society is now organized is imperfect, and hostile to the gen- 
eral welfare, since, through ir, the directors of labor, necessarily a small minority, are 
enabled in the competitive struggle to practically monopolize all the meaus of labor — 
all opportunities to produce for and supply the wants of the people — and the masses 
are, therefore, maintained in poverty and dependence. The industrial emancipation 
of labor— which must be achieved by the working classes themselves, independent of 
all political parties but their own — is, consequently, the great end to which every polit- 
ical movement should be subordinate as a means. 

Since the ruling political parties have always sought only the direct interests of tbe 
dominant or wealthy class, and endeavored to uphold their industrial supremacy, aud 
to perpetuate the present condition of society, it is now the duty of the working people 
to organize themselves into one great labor party, using political power to achieve in- 
dustrial independence. The material condition of the working people in all civilized 
countries being identical, and resulting from the same cause, the struggle for industrial 
emancipation is international, aud must naturally be co-operative and mutual ; there- 
fore, the organization of national and international trades and labor unions, upon a 
socialistic basis, is an absolute necessity. 

For these reasons the Socialistic Labor Party bas been founded. 

We demand that the resources of life — the means of production, public transportation, and 
communication — {land, machinery, railroads, telegraph lines, canals, #e.) — become, as fast as 
practicable, the common property of the whole people, through the government, thus to abolish 
the wages system and substitute in its stead co-operative production, with a just distribution of 
its rewards. 

The Socialistic Labor Party presents the following demauds, as measures to 
ameliorate the conoition of the working people under our present competitive system, 
and to gradually accomplish the entire removal of the same : 

1. Eight hours, for the present, as the legal w r orkiug-day, and prompt punishment 
for all violations. 

2. Sanitary inspection of all conditions of labor (means of subsistence and dwellings 
included.) 

3. Bureaus of labor statistics in all States,. as well as in the national government ; 
the officers of the same to be elected by the people. 

4. Prohibition of the use of prisou labor by private employers or corporations. 

5. Prohibition tf the employmont of children, under fourteen years of age, in indus- 
trial establishments. 

6. Compulsory education of all cbildren under fourteen years of age. All materials, 
books, &c, necessary in the public schools, to be furnished free of charge. 

7. Prohibition of the employment of female labor in occupations detrimental to health 



154 DEPKESSION'IN LABOK AND BUSINESS. 

or morality ; and equalization of women's wages with those of men, where equal service 
is performed. 

8. Strict laws making employers liable for all accidents resulting, through their neg- 
ligence, to the injury of their employes. 

9. All wages to be paid in the lawful money of the nation, and at intervals of time 
not exceeding one week. Violations of this rule to be legally punished. 

10. All conspiracy laws operating against the right of workinguien to strike, or to in- 
duce others to strike, shall be repealed. 

11. Gratuitous administration of justice in all courts of law. 

12. All indirect taxation to be abolished, and a graded income tax to be collected in 
its stead. 

13. All banking and insurance to be conducted by the government. 

14. The right of suffrage shall in nowise be abridged. 

15. Direct popular legislation, enabling the people to propose or reject any law at 
their will; and introduction of minority representation in all legislative elections. 

16. Every public officer shall be, at all times, subject to prompt recall by the election 
of a successor. 

The Chairman. Yon have given ns the platform of the socialists, and 
we have heard at length from Mr. Morgan on the subject of its applica- 
tion to government. State what, in jour opinion, has been the cause 
of the disasters to business and labor, and the remedy therefor. 

Mr. Schilling. If the panic that struck us in 1873 had been limited 
in its influence to America, I perhaps would have tried (like the Green- 
backers or other men who propose local remedies) to find a local or 
national cause for. it. But since the panic has been international and 
world-wide, I can come to no other conclusion about it than that 'there., 
is a common cause for it running through the commerce and industries 
of the world, and that the remedy must be also a common one. I have 
been studying the history of panics so far as I have been able to study 
it (because 1 am a workingmau and cannot always spare the necessary 
time to post myself). In the past they have assumed more of a local 
character than they have of late. The rotten banking system that pre- 
vailed some years ago was one cause of panics. In other countries there 
were probably different local causes, the outgrowth partly of overpro- 
duction and of the absence of an equitable distribution of the products, 
and of defective legislative institutions. But to-day we find, with a 
monetary system under which bank-notes do not fall dead in the pockets 
of the people as the old wild-cat bank-notes of some years ago did, the 
same disasters occurring from time to time, and instead of their remain- 
ing local they are universal. A few years ago we had an industrial 
crisis in America, while England and Germany were prosperous. To- 
day we have so internationalized our networks of commerce and trade 
that when one nation goes down, or when an individual crisis occurs in 
one nation, it shocks the whole industries of the world. I account for 
it simply by the gradual development of the powers of steam and elec- 
tricity, l)y the application of machinery to all productive enterprises, 
by concentrating production in the hands of a few, by the gobbling up 
of all the small producers who used to exist years ago, thus forcing- 
down wages. Why are the wages of labor forced down ? Because the 
more product that the man who hires me extracts from my labor, the 
more he holds up his power against me as a lash. If I go on and strike 
it does me no good, because the strike in my own stomach becomes so 
effective that I must return to work. That is the condition of the work- 
ing classes to-day, and yet men say that the system of human slavery 
is entirely abolished. I, as a socialist, say that slavery is not abolished. 
The chattel-slave system has only changed position. It has been only 
lessened in degree if it has been lessened at all. The principle of it still 
exists. Jefferson Davis made some remarks the other day in reference 
to the condition of the South, compared with its condition during slave 



DEPRESSION IN LABOR AND BUSINESS. 155 

days, in which he says that the wages institution in the South is to-day 
more profitable to the employiug class than the chattel slavery of some 
years ago, because a laborer is now employed in the South for almost 
nothing, and the planter has not to pay the doctor to attend him when 
he gets sick and has not to bury him when he dies ; and it* the black 
men are wanted to vote, the planter has only to present a discharge or 
a shot-gun to them. That is our condition in the North too, even if it 
is not so intensified in degree. 

The Chairman. That is your reason for the depression in business 
affairs in this country. What remedy have you for it i 

Mr. Schilling. Well, I have been a Greenbacker in the past; I do 
not believe that that remedy would do us any good at all. 

The Chairman. You do not think that an increase of the currency 
would help things? 

Mr. Schilling. I do not think it would ; in fact I know that it would 
riot. My candid opinion is that the small middle-men who are to-day 
failing, would be still worse off if the volume of currency was increased. 
If the government should to morrow issue a large volume of greenbacks, 
that issue would be the means of enabling the large capitalists to swal- 
low up the middle men, farmers and all, bag and baggage. I will tell you 
the reason. The peculiar function of capital is to increase itself by a 
legalized system of robbery called profit and interest. It is either the 
one or the other that money exacts, and if you pay your bondholders in 
greenbacks and destroy their opportunity to reap interest, they will im^ 
mediately put their money into the active channels of trade and enter- 
prise, and will get profit instead of interest. They will go from one end 
of the country to the other to find employment for their active capital. 
They will find that the land which is so cheap aud so permanent in value 
is the safest thing to invest in, and there will be still more men going 
out and buying land by the hundreds of thousands of acres, and they 
will commence farming on a large scale to the ruin of our small farmers, 
who will find that they can no longer compete with the large agricultu- 
ral monopolists. That is the natural drift of things ; and the only possi- 
ble effect that I can see of the greenback system would be the immediate 
development of a monopoly in agricultural affairs. If this would be the 
worst effect of it, I would not particularly care, but I look at it in this 
way : In looking at the classes of society to-day, I find that every par- 
ticular class is governed in its politics by its peculiar class interests. I 
find that the mercantile man to-day hates a Tom Scott and a Yauder- 
bilt because he has not been quite so successful as they, and he hates 
me because I say that there ought to be some equitable system of pro- 
duction and distribution, aud because I deny him the right as a middle- 
man to stand between me and the consumer and to exact his toll. He 
is governed by his peculiar class interests. He finds Yanderbilt on the 
cue side and -the wage- worker on the other. In fact, he stands between 
two mill stones, and it 1 am not much mistaken, I think that they are 
going to crush him out. 

The CHA1R3IAN. Have you an idea that there is money enough in cir- 
culation to. carry on the business of the country successfully % 

Mr. Schilling. You have had men hefe to-day before the committee 
who have made the monetary questiou a lifelong study, who have break- 
fasted, dined, supped, and slept upon it, and they are not able to tell 
you whether we have enough of currency or not. If I were in business 
to morrow and had a capital of $500 aud had a good demand for the sale 
of my goods, I could turn that money over four times in the year. That 
would be equivalent to doing a business on a capital of $2,000 if I could 



156 DEPRESSION IN LABOR AND BUSINESS. 

only torn that capital over once in a year. That goes to prove tbat 
there must be money enough in the country. There must be more actu- 
ally than the demands of trade require. But there is such a stagnation 
. that the purchasing ability of the people is destroyed and business men 
| cannot turn over their capital even once a year. If the consuming 
> power of the people were larger, a business man could turn over his 
$500 capital four times a year, and thus actually make more monp-y than 
he does now on a capital of $2,000. I do not think that the introduc- 
tion of a larger volume of currency would stimulate trade. 

The Chairman. Is the condition of trade here healthy at present ? 

Mr. Schilling. So far as the competitive system and long hours of 
labor are capable of leaving it healthy, it is. 

The Chairman. What is the price of labor ? 

Mr. Schilling. You had the statistics given to you last night. We 
took a great deal of trouble in getting up those statistics, and we found 
that the average rate of wages for adult mechanical labor is $1.02. 

Mr. Dickey. Some gentlemen want to know whether the engrossing 
of industrial pursuits by the government can be reconciled with per- 
sonal liberty. 

Mr. Schilling. It depends largely upon what you understand by per- 
sonal liberty. If it means a recklessness of the welfare of the greater 
number, then socialism would directly interfere with it. But if the defi- 
nition of John Stuart Mill— that a man can do as he pleases provided he 
does not transgress the rights of his neighbors — is the true definition of 
personal liberty, then socialism is the fruit of all that can be said in 
favor of it. 

The committee here took a recess till 8 p. in. 

EVENING SESSION. 

Chicago, July 30, 1879. 
Yieivs of Mr. Benjamin Sibley. 

Mr. Benjamin Sibley appeared before the committee as a volunteer 
witness. He stated, in reply to preliminary questions : I represent the 
Socialistic Labor party. I have lived in Chicago altogether about nine 
years. I am a photographer by occupation. My business, being one 
that supplies a luxury, furnishes a kind of index to the depression or 
prosperity of the people, and I am able to speak from that standpoint. 
I am employed in an establishment that is doing a very cheap and good 
business. It is doing very fine work at cheap prices, and under a pros- 
perous condition of things it would be patronized by the working classes. 
Although we are making pictures at less than half the usual price of 
first-class pictures, more than nine-tenths of our patrons. are certainly 
not of the laboring classes, As to the general depression of the labor- 
ing classes, I do not know that the committee desires me to make any 
statement. 

The Chairman. We are appointed to examine into the causes of the 
depression of labor and of the depression of industries, and to suggest the 
remedy. What we want you to state is the cause of the present depres- 
sion in labor, the prices of wages, and such matters. 

Mr. Sibley. If I commence with the acknowledgment that labor is de- 
pressed, that will save me much trouble. 

The Chairman. Your tabular statement, exhibited here yesterday, fur- 
nishes us proof in regard to that. 



DEPRESSION IN LABOR AND BUSINESS. 157 

Mr. Sibley. I attribute the depression of labor first to a lack of what 
I choose to call civilization. Civilization is material wealth and knowl- 
edge. Material wealth and knowledge are the products of human la- 
bor. Ignorance and poverty are their opponents or autipodes. The 
depression of labor, in my opinion, is the result of a lack of that kind of 
civilization on the part of the laboring classes. 

The Chairman. What we want particularly from you is to ascertain 
the causes of the depression and. the remedy for it. 

Mr. Sibley. My remedy is to remove the causes. If the causes of the 
depression of labor and the poverty of the laboring class had lain on the 
surface, they would have been discovered and removed long ago. . 

I pretend to know where the causes of all the poverty and all the 
ignorance of the laboring classes lie $ and I pretend to know — I do 
know without the possibility of a mistake — the only way in which those 
causes can be removed, and I propose to tell you what I know in the 
plainest and shortest way. 

In the first place, poverty and ignorance are the natural or primary 
conditions of all men. 

The reason why the masses remain in that condition is that state or 
government ignores its most important function. 

Commerce is the exchange between all the individuals of society of 
their labor or its products, including thought and knowledge. • 

This exchange of thought and the natural products of human labor 
constitute the foundation of all civilization. 

The only thing of value which each man by nature possesses is the 
ability to think and labor, and the one condition most necessary to his 
prosperity and happiness is the opportune to exchange his labor for 
the labor of others. 

Government is the creature of men, and should be the instrument to 
secure their prosperity. Hence I claim that the most important func- 
tion of government or state is to provide the means, or, if necessary, to 
be the means, by which all the members of society may exchange their 
labor. 

Our government does not perform this function. 

Our government, I know, makes laws in the interest of the individuals 
who assume this important function of state. But these individuals do 
not perform this function as a duty to the u people," whose labor they 
buy and sell, but they perform it entirely for the purpose of retaining 
as large a portion as possible of the products of that labor ; and as all 
they gain is a loss to the persons who perform the labor, the interests 
of the two classes are directly opposed. 

Statistics prove that the productive laborers of the country receive the 
power to purchase for their own use or consumption only about one- 
sixth of what they produce. 

That it should cost more than eighty-one hundredths of all the wealth 
produced to effect the necessary exchanges and run the government is 
in itself monstrous, but the results which follow are still worse. 

The people are unable, in the first place, to purchase all they produce, 
but since this system stimulates the incentive to accumulate money, 
they are unwilling to purchase all they can. 

It needs but common sense to determine what must always follow. 
The people will all, and always, be trying to sell into the market more 
labor than they are able or willing to buy out, and history proves what 
common sense predicts. 

And hence arises the evil which holds the laboring classes in poverty, 
ignorance, and many of the conditions of absolute slavery. 



158 DEPRESSION IN LABOR AND BUSINESS. 

They are compelled to compete and underbid each other for the oppor- 
tunity to labor. 

All the accumulated means of production and exchange are the results 
of human labor. Th^y are necessary to the industries of the people, and 
should be accumulated as the property of those who are to use them. 
What cannot be used by one alone, should be owned as the common 
property of all those who use it, or have a common interest in the man- 
ner of its use. 

These things are now chiefly owned by men who do not use them, and 
who have obtained them in the shape of profits on other people's labor, 
and they have been able to gain this profit because the people have 
neglected to provide means for co-operation and exchange without lo.ss 
to themselves. 

I need hardly remind you that since man brings nothing into society 
except the ability to labor, the first thing necessary to the exchange of 
that labor is the opportunity to apply it; and in the means of exchange 
must be included the means by which the raw labor is reduced to an 
exchangeable commodity. 

it is not required that any one of the rights or liberties of any of the 
people should be in any way abridged. 

Nor is anything required that would have a tendency to depress indi- 
vidual ^enterprise. 

It is simply necessary that the government should fill for the people 
the position now filled by the class of individuals known as capitalists, 
who do nothing of use except to own the means of labor and the homes 
of the people, and who now absorb more than three-fourths of all the 
products of their labor. 

I expect this step to be opposed by all who do not earn their own 
living, because it would secure all the results of labor to the laboring 
classes, and hence would starve out of existence all others. But I 
believe it must come. 

The Chairman. How are you to effect your object! 

Mr. Sibley. J would effect that object by the establishment of an in- 
dustrial republic. By an industrial republic, I mean a republic in 
which those things left by nature — by natural means — and those things 
which from time to time are accumulated as the product of natural ne- 
cessity, shall remain the common property of the whole people, for the 
sake of enabling all the individuals in society to co operate for assist- 
ance and protection. 

The Chairman. Do you think that Congress has the power to bring 
about that state of things? 

Mr. Sibley. I did not say that. 

The Chairman. What part of it has Congress the power to do % 

Mr. Sibley. The power of Congress under our Constitution I confess 
more ignorance of than as to the condition of the laboring classes and 
as to what is necessary to their development. The first thing necessary 
to any change is that people should understand and know what the 
change is to be and how it is to be effected. It may not be possible 
under our Constitution (although I believe it is) for Congress to make 
many steps in that direction. Bat one thing is certain, that when a 
majority of the people are made to understand that what I have stated 
is necessary to the prosperity of the people, the difficulty will be over- 
come. 

The Chairman. Not without action on their part? 

Mr. Sibley. They will certainly act, and a fair report in Congress by 
this committee of the statement which I have made would go far, not 



DEPRESSION IN LABOR AND BUSINESS }5f 

only to the advancement of tbe cause of humanity in general, but 
would go far to do an act of the very greatest justice, and something 
which certainly ought to be done. The truth ought to be set before the 
world in regard to the men who are called communists and cut-throats, 
and who represeut the Socialistic Labor Party of Chicago. 

The Chairman. What is the number of that organization in this 
city 1 

Mr. Sibley. T think that probably the organization has a member- 
ship of about GOO, but the majority of our sympathizers do not belong 
to the organization. They are meu who work too hard and have too 
much to attend to to become interested in » the matter. They simply 
follow us and listen to what we have to say, and understand as much 
of it as they are capaple of understanding. They believe that we are 
right, and they vote for our principles. 

The Chairman. About what percentage of those who belong to your 
organization and of those who sympathize with you are to-day out of 
employment in this city °! 

Mr. Sibley. Auy answer that I would give to that question would 
be mere guess-work. I should judge, however, that probably from ID 
to 20 per cent, were out of employment. 

Mr. Martin. Are those men skilled laborers f 

Mr. Sibley. There are many skilled laborers out of employment. 

Mr. Martin. Belonging to your association ? 

Mr. Sibley. I know only one or two. I know one carpenter who has 
worked about half the time. Whether or not he can be said to be out 
of employment or in employment I hardly know, because sometimes he 
gets a few clays' work. Sometimes he works steadily fora week at a time 
aud sometimes for two weeks, and at other times for a month. There 
are probably hundreds of men in his trade and in other trades who are 
in the same condition — that is, who work from one-third to one half of 
their time. 

The Chairman. Are matters improving in regard to finding employ- 
ment ! 

Mr. Sibley. I hardly think they are. My own business is the best 
standpoint from which lean judge. For the last six years I have been 
connected in a general w r ay with the photographic trade in Chicago, and 
that trade is quite a fair index of the whole city. I find that in that 
trade there has been asteady decline j our prices have declined more than 
50 per cent, all around, and still the demand is on the decline. We are 
unable to sell half as many pictures as we did four or five years ago. 

Mr. SnERWiN. Is the socialistic party a secret organization % 

Mr. Sibley. No, sir. I must qualify that answer a little. We are 
an organization with an enrolled membership, and whenever we have 
any business to transact we are able to close our doors, if we wish, but 
w T e never do so except very seldom. 

Mr. She r win. Are there ranks or grades in your society ? 

Mr. Sibley. No, sir. We have officers to transact the necessary busi- 
ness. That is all. 

Mr. Sheryvin. Do you know what proportion of the people who sym- 
pathize with you and call themselves socialists are naturalized citizeus? 

Mr. Sibley. No, sir; I do not. 

Mr. Siierwin. What would be your opinion on that point % 

Mr. Sibley. I should judge that we average, probably, 10 or 15 per 
cent, more naturalized citizens than there is in the community at large, 
on account of the large number of Germans who are socialists. 



160 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Sherwin. A great many of your sympathizers are not natural- 
ized at all, I understand. 

Mr. Sibley. I do not know anything about that. I do not know any 
person belonging to the party who is not a citizen of the United States. 
I think that those who sympathize with us become naturalized, because 
a man who becomes a socialist has interest enough to secure a vote in 
the community. 

Mr. Sherwin. What countrymen predominate most among the so- 
cialists 1 

Mr. Sibley. Germans predominate. 

Mr. Siierwin. There are Bohemians among the socialists ? 

Mr. Sibley. Yes. 

Mr. Siierwin. And Poles .? 

Mr. Sibley. I do not know. 

Mr. Siierwin. And Scandinavians ? 

Mr. Sibley. Yes; probably 10 per cent, of the organization are Scan- 
dinavians. 

Mr. Siierwin. How about the Irish 1 

Mr. Sibley. They are a little less in number than the Scandinavians. 
The Irish do not become interested in the organization so extensively 
as the Germans do. They stay outside of the organization and vote for 
us. I should judge that about 25 or 30 per cent, of all the voters who 
voted our ticket at the last election were Irishmen. 

Mr. Sherwin. What per cent, of them were Germans ? 

Mr. Sibley. Probably 40 per cent. 

Mr. Sherwin. And what per cent, were Bohemians and Poles? 

Mr. Sibley. I cannot tell you ; but they were a small number, 

Mr. Sherwin. Were there any Englishmen among them % 

Mr. Sibley. Very few, I should judge. 

Mr. Sherwin. Then the percentage of native-born population among 
the socialists is small % 

Mr. Sibley. U, yes ; the percentage of Americans is probably not 
over 10 per cent. 

Views of Mr John McAutiff. 

Mr. John McAuliff came before the committee as a volunteer witness 
He stated, in reply to the chairman : I am a resident of the city of Chi- 
cago ; I have been here about six years ; I am an engineer, a stationary 
engineer. It is quite evident when panics occur so often as they do, 
and when there is so much poverty and want as the statistics of chari- 
table institutions show, that there is something inherently wrong in the 
methods of producing and of distributing the products of industry. We 
transact business under what is called the competitive system. This 
competitive system places every man at war with every other man. It 
is a system of one man in America against forty millions against him. 
The more property that every person can get under his power, or call his 
own, is his fortification. It is that with which he fortifies himself to resist 
the aggressions and encroachments of his fellow-beiugs. As business is 
transacted we have two classes, the capitalist and the wage-workiug 
class. In fact we have three classes now — the monopolistic class (in- 
cluding the capitalists and merchants), the manufacturing class, and 
the wage-working class. According to the United States statistics of 
1870, the capitalistic class, about three-tenths of the population, received 
four-fifths of the products of industry, while the wage-working class, 
seven-tenths of the population, received but one-fifth. Consequently 



DEPRESSION IN LABOR AND BUSINESS. 161 

the wage-workers are unable to purchase more than one-fifth of the pro- 
ducts of the country. Out of what the wage workers get they save a 
part, and the capitalists save a part out of what they get; so that in 
course of time a stock has been accumulated, and, according to the law 
of supply and demand, it would be unprofitable for the capitalists — who 
have the power to say that so many hats, or shoes, or buildings, must 
be produced — to continue production after that limit has been attained. 
If a man have a million dollars cash in a fire proof vault, and if he have 
a building worth a million dollars, of which he can only employ or rent 
a portion, he would be very imprudent to take his million dollars out of 
his safe and put up another building, because he would be thus doub- 
ling the quantity of real estate in the market and thereby reducing the 
value of that which he had already on hand. This rule will apply to 
every branch of industry. The capitalistic class claims that then 1 should 
be more produced ; but we, the socialists, claim that there should be 
more consumed. There isn't a storehouse in Chicago in the dry goods 
business, in the shoe business, or in the hat business, that has has not 
a large stock on hand, and the manufacturing establishments in the 
east will not produce more until they have disposed of the stock en 
hand. Every time the wheel of industry goes around there is a part of 
its products saved, until in course of time the wheel of industry clogs 
and must be stopped. It is simply a question of time when we are to 
have a panic, because if but a small part of the products of industry 
be saved, it will take a long time to get up a surplus stock ; but if a 
large part of the products of industry be saved it will take hut a short 
time; and a large stock on hand means a panic. Now, if the figures 
were reversed, and if the seven-tenths. of the population who are the 
wage- workers could consume four-fifths of the products of industry, 
leaving to the capitalistic classes, who are three-tenths of the people 
only, one-fifth of the products of industry, the result would be the same 
as it is now, viz, that in course of time a stock would be on hand saved, 
and then we would have a panic, bringing with it misery and destrue^ 
tion. The paramount cause of that trouble is the competitive system, 
which places us at war with each other. The opposite of that principle 
which has produced the present result may fairly be supposed to pro- 
duce the opposite result. Now the opposite of competition is co-opera- 
tion. In order that we may co-operate, we must get hold of the 
natural materials of the earth and of the means of production. There 
are three ways to do that. One way is to apply the law of eminent 
domain. The ownership of every square inch of land emanated from 
Congress, and Congress has the right to take it back whenever the 
public interest requires that step. Another way is, to abolish the 
law of inheritance, so that the property of a decedent may revert 
to the people. Another w T ay is to take the property from the 
people who hold it, in the same manner as the negroes were taken 
from the slave-owners. This last measure is certainly not a very 
desirable means, but I am afraid that it is altogether too late to bring 
about the desired result in any other way. I believe that the first thing 
that Congress or any other legislative body can do is to confess to the 
people that it is not competent to deal with this question ; that the mo- 
nopolistic classes, having got control of such a large amount of capital, 
are able to preveut Congressmen from carrying out any legislation which 
they might desire to enact in behalf of labor, or of a proper adjustment 
of the relations between labor and capital. Congress should say to the 
people, "We are competent, mentally, perhaps, to deal with this ques- 
tion, but we cannot grasp the elements and forces that are brought to 
H. Mis. 5 11 



162 DEPRESSION IN LABOR AND BUSINESS. 

bear against us by the monopolistic classes so as to be able to control 
matters and to enact laws which we wish to make. It is beyond our 
power to settle this matter, and the people must no longer look to us, 
but must look to themselves." It may be said that the people today 
look to themselves, but when you take into consideration the fact that 
there are 4,000 voters in the employment of the street railway compa- 
nies of Chicago, and a large number of voters in the employment 
of the gas company, and a large number of voters in the employment of 
the stock-yard company, and of packing-houses, and a large number of 
voters in the employment of contractors who have wires to pull, and who 
are desirous of electing this, that, or the other man to office, and that 
these voters are all bulldozed by their employers under threat of being 
discharged unless they vote as their employers dictate ; then we must 
come to the conclusion that the capitalistic classes control legislation, 
and that the wage- working classes do not; that, under the present in- 
dustrial system, opposition to the capitalistic classes means discharge 
from employment, and that discharge from employment means want of 
bread and consequent misery to the workingmen ; therefore, to-day, we 
are in reality, to a large extent, under the control of a capitalistic Con- 
gress, instead of being under the control of a hereditary Parliament, as 
in England. Congress and every legislative body in this country might 
revolt against the money power, and might legislate in the interest of 
the people, and then the people would go with them and uphold and 
maintain them. The revolt against the capitalists must nome from Con- 
gress, and if it does not come from Congress it will come from the 
people, and Congressmen will be deposed. In this city, during the last 
five years, the great dry goods firm of Field & Leiter has doubled its 
business, has invested $3,000,000 in real estate, for which it paid cash, 
and has gone into the mining business out West. It could not do that 
in what are called good times. The monopolistic classes in every branch 
of industry are accumulating a great deal more than they could do by 
legitimate business in what are called good times. Having the power 
to monopolize, they do not intend to let go their grip. They will hold 
that power against the power of Congress and against the power of the 
people so long as they can. That power which has got its grasp upon 
the throat not only of laboring but of all industrious people of the coun- 
try must be broken, and it can only be broken by revolting against it. 
I do not believe that Congress has the ability to break it, for the rea- 
son that there is not sufficient moral sentiment abroad among the peo- 
ple to uphold and maintain Congress. Congress must take a large 
part of the money now appropriated for the use of military organi- 
zations and use it for the benefit of the industrial classes. Con- 
gress must establish a labor bureau. Delegates from both the capital- 
istic and wage working classes, men who are interested in the mat- 
ter who are noted for their humane sentiments should be called into 
requisition, and should be sent through the land to disseminate 
such principles and ideas as are necessary now for the develop- 
ment and welfare of the people. I do not believe that we cau get 
out of this difficulty in any peaceable manner. Nevertheless, we can, 
by agitation in Congress and elsewhere, instruct the people so that when 
they do revolt against this monopolistic power, they will know what 
they are fighting for, and will not be like the Irishman who said he often 
went into a fight without knowing what he was fighting for. The great 
masses of the people to-day are in that condition. The first thing that 
they need is intelligence, and without the assistance of the governing 
power of the country the people cannot get that intelligence, unless as 



DEPRESSION IX LABOR AND BUSINESS. 163 

it is disseminated among them by men who work ten and twelve hours 
a day, as I do, and who go before the people and give them such infor- 
mation as their limited leisure and limited education and opportunities 
enable them to lay before the people. I look to Congress and to the 
State legislatures for nothing. 1 look to the common people, who are all 
down in the slums, to rise in revolt. When Frederick the Great asked 
Franklin what the American people expected to accomplish, Franklin 
replied, "Freedom, sire.' 7 That is the case with us. It is not for mere 
bread and butter and shelter that we must revolt ; but it is to get free- 
dom, it is to abolish the present condition of wage-labor, that the social- 
istic party has been organized. That is its central point; we cannot 
do it unless we get hold of the materials. As man is born with a natural 
right to breathe, it is self-evident that he is born with a natural right 
to have water and air without asking somebody else for it. He is born 
with a natural right to have bread, and he is entitled to it without being 
obliged to ask somebody else for the privilege of earning it. This move- 
ment is a struggle for the practical recognition of that natural right. 
Some eight years ago I was bulldozed out of a position of $1,800 a year 
which I had in New York. For the next year I was not able to obtain 
any position because I had advanced my sentiments and opinions in 
public in favor of the wage-working classes, and the capitalists said that 
the quickest way to shut me up was to starve me. I have no hesitation 
in saying that out of fifty-five or sixty thousand voters in Chicago 
there are from fifteen to twenty thousand of them who are bulldozed. 
They have the same liberty as the negro slave had in the South, the 
liberty to revolt against the dictates of their. employers and to take their 
goods. That is the liberty which the negro slave always had. We 
must get out of this present industrial system into a new system, which 
must be a co-operative system — the people owning the means of labor 
and the natural materials of the earth. In some manner we must get 
into that system. The three methods which I have mentioned are the 
only methods that I can see; that is, first, the practical application of 
the law of eminent domain; second, the abolition of the law of inher- 
itance ; and, third, the taking away of the property from the Scotts and 
Yanderbilts, and from whoever own it. Individual interests must re- 
ceive no consideration whatever in the settlement of the question, if it 
comes to that, any more than they did in the South. I believe that in- 
side of three or four years the revolution of all the ages will be inaugu- 
rated in this country. That is the conclusion of six years of earnest, 
unselfish, disinterested (comparatively speaking) study of the question. 

Yieivs of Mr, James Me Arthur. 

Mr. James McArthur appeared before the committee at its invitation. 
He said, in reply to preliminary questions : I am a resident of Chicago ; 
I have been engaged in the manufacture of iron, the production of coal, 
and in public works. My business in iron and coal has been in Ohio, 
where my interests now are. I resided there until three years ago. 

The Chairman. Are you engaged largely in business now ! 

Mr. McArthur. I was; and am now somewhat, but not so much as 
I was at that time. 

The Chairman. State in general what, in your judgment, has been 
the cause of the reduction in the prosperity of the country since 1873. 

Mr. McArthur. I attribute it to three things, and I will state them 
in the inverse order of their importance. It seems to me, first, that the 
contraction of the large foreign debt which we contracted prior to 1874, 



164 DEPRESSION IN LABOE AND BUSINESS. 

and the stoppage of the bringing in of capital here from abroad, whicii 
was going on before that time, would, if there had been no other cause, 
have had the effect of depressing business from that time to this. Still 
I do not deem that an important factor. Next, I think that the passage 
of the resumption act in 1875, whereby it was decreed that the money 
then in use (wltich was the measure of values) should be enhanced in 
value, that the yard-stick should be increased in length at least one- 
eighth, and that all pre existing debts should be settled by the new 
measure, although they were incurred by the old measure, was a great 
cause of the trouble. And the third and last cause to which I attribute 
the depression in business is the demonetization of silver. That took 
place, it is true, in 1873, but its effect was not felt until 1876. I think 
it is conceded that in 1865 we had the largest volume of currency that 
we ever had — certainly the largest per capita of population, although it 
is true that there is some question as to just what constitutes money and 
as to just what part of the national debt should properly be considered 
money. It is a difficult question to determine exactly what part per- 
formed the office of money and what not, but I think it will be conceded 
that our volume of money was larger at that time per capita, and larger 
in proportion to the amount of business done, than at any time before. 
We might reasonably have expected, indeed, what did take place. From 
1865 to 1873 there was a fall in prices. The tables published by the 
New York Public show that in 1866, in leading commodities in the New 
York market, there was a large fall in prices. In consequence of the 
diminution in the volume of money, I should have expected (and, in- 
deed, it was generally expected) that the fall in prices would have been 
greater, and I should have expected (had there been no other cause at 
work) that a depression in business would have begun sooner. But. in 
my judgment, the effect of this cause was neutralized by the large in- 
flux of foreign capital which came here for investment. The total debt 
was estimated at something more than two thousand millions from the 
beginning of the war till 1874. It stopped at that time, and I think 
(although that was not the important factor) that if there had been 
nothing else in the case, if we had had no monetary legislation what- 
ever, the stoppage of that influx of capital from abroad was enough to 
have prevented us having as good times from 1873- ; 74 as we had be- 
fore. 

The next cause that I named, the resumption act, has been debated in 
Congress so much that it is rather stale. At the time that that act was 
passed, in 1875, the premium on gold was some 12 or 13 percent. If the 
purchasing power of gold had not been increased (as it was thereafter), 
if we had appreciated by legislation the value of our money only from 
its then value in gold, that would have been in itself a change iu the 
measure of value which would have changed the distribution of prop- 
erty, which would have taken from one class and given to another with- 
out its consent and without compensation. It was simply, in my judg- 
ment, confiscation. That would have caused falling prices, and was 
sufficient to cause the depression which we did have (added to the 
causes before) from 1871 to 1876. 

Now, it so happened that the demonetization of silver in Germany 
changed the relative value of silver and gold, although there has been 
(as I think is conceded) no depreciation in the value of silver. An ounce 
of silver will buy as much at this time as an ounce of silver would have 
bought at any time, yet the relative value of silver and gold has changed 
very considerably. When the value of our paper money, reached the 
value of silver, when a greenback dollar was worth 412.^ grains of sil- 



DEPRESSION IN LABOR AND BUSINESS. 165 

ver, if we bad not theretofore changed oar metallic standard tbe ill ef- 
fects of resumption would have been at an end, or nearly so; the value 
of our paper money and of silver would have been equalized. It is true 
that they would have reached au equality sooner had not the value of 
the two metals been disturbed by the demonetization of silver in Ger- 
many ; but still we would have had all the benefits of resumption in coin, 
at least, had not the one mode of paying debts been taken away. Now, in 
the mean time the value of gold has appreciated until (according to the 
London Economist, in an article published a few weeks ago) the purchas- 
ing power of gold has been increased about 25 per cent. If no other causes 
had been at work, but simply the bringing of our paper money to the 
present value of coin, that cause alone would have appreciated our stand- 
ard some 25 per cent. I think that the appreciation of money and the 
depreciation ot other things has been more than that; and for another rea- 
son, that prices are maintained in no small degree by the use of credit, and 
that a proportion of our business is ordinarily done on credit. I think 
it is a moderate estimate to say that in this country, in times of business 
prosperity, not less than three- fourths of all our exchanges are effected 
without the use of money at all. Assuming that proportion to be right, 
it would require at least four times the same volume of money to effect 
our exchanges on the same scale of prices, if credit were not used. Now, 
one of the first effects of this appreciation in the value of money (which 
means depreciation in the price of all other things) was to stop production, 
to stop factories, to stop the production and owning of things that con- 
stitute wealth, to throw out of employment many laborers, to prevent 
the ability to consume as theretofore, and to destroy private credit very 
largely, and this destruction of private credit threw upon money a large 
part of the work theretofore done by credit, and still further enhanced the 
value of money. In brief, I think that the three things which I have 
named are the causes of the depression which we have had in business 
for a number of years. 

The Chairman. According to your judgment, did the wages of labor 
fall off in proportion to the depreciation of industries! 

Mr. Mc Arthur. From my own experience I should think that it about 
kept pace with it. It was not widely different from it. This panic of 
1873. in my judgment, was caused in the same manner as all other 
panics are. If there were no debts there could be no panics. Panics 
come because people get into debt. We were nearly out of debt in 
1865. During the war and during the entire period of inflation of prices, 
we were more nearly out of debt than at any other time since then, and 
possibly than at any other time before. But with the close of the war 
this capital from abroad was induced to come here. A few bonds were 
sold abroad during the war at low prices, but after the close of the war 
they enhanced in value. We had done but little railroad building in 
this country for many years theretofore. The securities of the railroads 
tkat we then had were generally good and they attracted capital from 
abroad. It came ptfuring upon us here, and probably some fifteen hun- 
dred million dollars came in from abroad in those eight years. At the 
same time our people here undertook new engagements — L mean the 
people who ordinarily used the capital of the country. Many of our 
business men extended their engagements beyond the amount which 
they were accustomed to borrow. Another cause of the panic greater 
than this was that another large class of people, whose savings were in 
the savings banks and in banks of deposit, and had been loaned to peo- 
ple using them as capital, undertook engagements. A great amount of 
these savings was subscribed for the purchase of the Northern Pacific 



166 DEPRESSION IN LABOR AND BUSINESS. 

Eailroad bonds, and for a dozen other things, which invited the with- 
drawal of capital from the men who were using it. All this created a 
great demand. The demand came at once. This fabric of credit had 
been too widely extended and the demand for payment came, and when 
it came it came as is often the case, suddenly. Hence the panic. I do 
not conceive that the quality of the money which we had in use had 
any connection whatever with the panic. Just such panics have occurred 
where there was nothing but metallic money used. 

Mr. Cowgill. Do you think that the very fact that we had such an 
abundance of money thrown upon the country at that time begot 
that spirit of speculation which caused this vast amount of indebted- 
ness? 

Mr. Mc Arthur. I think not. 

Mr. Cowgill. What was it that begot it 1 

Mr. McArthur. Our inflation commenced in 1862. The depreciation 
in the value of our paper was greatest in 1864, although the quantity of 
paper money was greatest in 1865. Up to that time, while one might 
think (and naturally would think) that rapidly rising prices would in- 
duce a large extension of debt, it did not do it here in our case. It did 
not do it in England when she suspended payments in 1797. The panic 
in England came after the war, in 1816, whereas in 1810 and 1812 the 
depreciation of the English paper currency was greatest. When we in- 
flated in coin in 1850, debts did not increase. We had our panic in 
1857. It came around in regular time. Now, while it would seem at 
first sight that during a period of inflation, during a period of rising 
prices, debts would be largely contracted, that was not our experience. 
Our debts were contracted on a lessening volume of currency; on a vol- 
ume, at least, which was lessening in proportion to the population and in 
proportion to the business that was being done by it. 

Mr. Cowgill. There must have been some reason for people con- 
tracting debts. 

Mr. McArthur. They did it just as much on one kind of money as on 
another. 

Mr. Cowgill. What was it that induced the people to contract this 
enormous amount of indebtedness % 

Mr. McArthur. I have given the reasons so far as I can see them. 

Mr. Cowgill. You have said that the debts were not contracted when 
we had the largest amount of currency % 

Mr. McArthur. They were not. 

Mr. Cowgill. But that does not give the reason why they were con- 
tracted, and that is what I want to know. 

Mr. McArthur. Our history shows that about once in ten years we 
have a panic. It comes from an undue extension of credit. It comes 
from another thing — from undertaking new enterprises out of propor- 
tion to the available ready capital that we have. And it comes quite 
irrespective of the kind of money we use. Why it is that once in a de- 
cade people will engage in speculation (and we are* at the beginning of 
that, now.) I do not know that I can undertake to say. I have given 
the thing which looked to me most apparent for the last panic, which 
was that there had been a large European capital invested here. We 
did not receive money for the whole two thousand millions of dollars of 
our indebtedness that went abroad. It came in goods, which goods were 
used here. Not only did we receive no money for it, but we sent abroad 
all the metals which we mined during all that time. We received the 
goods which supported the laborers ; we received the property which 
went into construction. That foreign indebtedness was changed into 



DEPRESSION IN LABOR AND BUSINESS. 167 

fixed property. It built railroads and factories and gave employment 
to labor. Notwithstanding the fact that we had a diminished volume of 
currency we continued to run into debt, and that caused the panic. So 
far as the quality of our money affected the question at all, in my judg- 
ment it retarded the contraction of these debts, because they would 
have been more likely to have been contracted on money that was at 
least not increasing in value. But that was the fact. Here were eight 
years of generally falling prices during which this large volume of debt 
was contracted ; aud the consequence followed, as it would have fol- 
lowed with any other kind of money. 

Mr. Cowgill. Then you can give no other reason for the panic than 
that once in every ten years the whole community becomes wild ? 

Mr. McArthur. There are reasons doubtless, but I cannot undertake 
to discover all the secondary causes. The primary cause is the one 
which [ have given — the running into debt. We had not been building 
railroads in proportion as the country had been extending. Such se- 
curities as we had were paying well. Government securities were pay- 
ing well. The rates of interest were higher than government securities 
abroad offered. * 

Mr. Cowgill. Is it not a fact that from 1870 to the time of the panic 
in 1873 there were a great many railroads built in the country which, 
have never paid the stockholders a penny % 

Mr. McArthur. It is undoubtedly true that a great many roads 
were built that did not pay the owners. 

Mr. Cowgill. It follows that there were investments made in some 
things which did not pay, leaving the people largely in debt? 

Mr. Mc Arthur. Undoubtedly. The same labor could have been 
better directed ; but whether the country has been made poorer or not 
by the building of these roads is another question, because while the 
railroads may not pay the owners or may not bring them any return 
for their investment, the adjacent property has been benefited by them, 
and the question is whether the enhanced value of the property is greater 
than the amount invested in buifding the road. If it is, the country 
has not been made poorer, while the owners who invested in the road 
may have been. 

Mr. Cowgill. Following out the idea in the light you are presenting 
it ; although the country may be richer as a country by the building of 
these roads, is it not a fact that those who made the investment lost 
their money and their property and found themselves in debt, and that 
from that resulted the distress, because it is only the men who are in 
debt who have been in distress ? 

Mr. Mo Arthur. The distress of the panic came indirectly from the 
losses there. But remember that that was the first panic in our history 
in which we had no money discredited. In all panics heretofore, es- 
pecially in 1837, the money all over the country was discredited. In 
1857 no small part of the Western money was discredited. But. in 1873 
not a dollar was discredited. Private credit was overthrown, but that 
is a thing which recovers a good deal more quickly than money can be 
replaced. I think we never had a panic in our history the effects of 
which we got over more quickly than that of 1873. 

Mr. Dickey. When did the effects of that panic cease to be felt ? 

Mr. McArthur. In my judgment in less than a year. I was manu- 
facturing iron pretty largely at that time, and we had a prosperous year 
in 1871. So far as that panic was concerned, its effects were over in a 
year. 



168 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Dickey. Were its effects over as soon in regard to the whole 
country 1 

Mr. Mc Arthur. We had commenced to get better. We had not 
reached the point that we fell from, but we were coming up to it in less 
than one years time. 

Mr. Dickey. And you attribute that to the fact that the money was 
not discredited ? 

Mr. McArthur. Yes. 

The Chairman. What, then, continued the depression % 

Mr. McArthur. The resumption act of 1875 and the demonetization 
of silver. These are the two things, I think. 

The Chairman. What had contraction to do with it? 
S Mr. McArthur. Contraction had this to do with it: It was known 
by the people who deal in money securities (sooner than other men knew 
it) that there was to be a change in the value of property, that the money 
in which it was measured was going to be worth more ; and immediately 
there was a disposition not to invest in property, not to lend money as 
capitalists had theretofore lent it. It is true that the resumption act 
of 1875 made banking free, and provided for the withdrawal of 80 per 
cent, of greenbacks according as new bank notes came into existence. 
But the very fact that it was known by a large number that property 
was to be depreciated tended to depreciate it. The very fact that it 
was known by the owners of capital that property of any kind might 
be worth less four years hence, and would be worth less four years 
hence, tended to injure and destroy private credit. It made banking 
profitable. Many of the national banks surrendered their circulation, 
and although some national banks added to their circulation, yet in the 
aggregate the circulation was reduced from $354,000,000 to $322,000,000, 
while in the mean time the volume of greenback currency was reduced 
from $382,000,000 to $346,000,000 or $347,000,000. That is what it is 
now. The process of hoarding greenbacks in the Treasury has grown 
up since that time. It is being done, in my judgment, in defiance of law. 
That tended further to contract the volume of money. This seemingly 
small contraction of $70,000,000 is the short arm of the lever. 

Mr. CowGiLL. If there was a demand for money in the country, it 
would be profitable to any person who had the ability to furnish it, would 
it not be % 

Mr. McArthur. If money could be profitably used, I have no doubt 
that it would be furnished under the law as it exists. 

Mr. Cowg-ill. If it could be profitably used when there was such 
an abundance of it, why does there not still continue to be a demand 
for it if it can be profitably used % 

Mr. McArthur. You had better define what you mean by demaud. 
In the economic sense, demand means offering something which you 
have for something which you want. The measure of the demand for 
money is how much you offer for the money. Money cannot be profit- 
ably used, and people do not offer much for it, and therefore there is not 
much demand for it. 

Mr. Cowgtll. Is it not a fact that people made mortgages on their 
houses, and farms, and lots, all through the country at exorbitant rates 
of interest, for the purpose of obtaining money, from the time of the panic 
up to within the last year or two f 

Mr. McArthur. Not much, unless it was to discharge pre-existing 
debts. And when it was not for that, the people who borrowed money 
to engage in enterprises made a sad mistake. 



DEPRESSION IX LABOR AND BUSINESS. K)9 

Mr. CowaiLL. They made a sad mistake in going into debt at all, did 
they not ? 

Mr. Mc Arthur. They did. Those who were so unwise as to borrow 
and agree to pay back the money in the future, were agreeing to pay a 
great deal more days' labor for it than they supposed, and a great deal 
more of their productions than they supposed, and they made a bad 
bargain. 

Mr. COWGILL. That was because the money got to be worth more 
than it was worth at tbe time the debt was contracted ? 

Mr. Mc Arthur. That is it exactly. 

Mr. CowaiLL. If it is because there was a contraction of the currency, 
why was that trouble not remedied by the national banks furnishing the 
amount ; because the national-bank currency is equally as good as green- 
backs and equally as good as gold. Why, then, did not the national 
banks furnish a sufficient amount of currency to answer all the monetary 
purposes of the country ? 

Mr. McArthur. There is no such demand for the money as would 
warrant that. 

Mr. CowaiLL. Then you think there is not any considerable demand 
for money ? 

Mr. McArthur. You must not confound demand with desire. Desire 
and demand are, in economics, two different things. The demand did 
not take the form of offering such an interest for it as would induce 
capitalists to furnish the money. 

Air. Cowg-ill. Do you mean that they could uot give sufficient secu- 
rity for it 1 

Mr. McArthur. If they could give sufficient security for it, they 
could not use it profitably. It was decreed by the government that the 
money in which the debt should be paid back would be worth more than 
It was when the debt was contracted. 

Mr. CowaiLL. If these debts were wisely made and for proper invest- 
ment, the borrowers could afford to give sufficient security to pay back 
their honest debts, could they not ? 

Air. McArthur. I do not know. There would not have been so many 
people wrecked as there have been if people had understood the forces 
that were at work. We were told all the while that at the next election, 
or on tbe occurrence of some event, confidence would be restored and 
the times would become better. 

Air. CowaiLL. I understood you to say that the times have been grad- 
ually growing better since the next year after the panic ! 

Air. McArthur. I said that during the year 1871 business was im- 
proved, but I have not said that the improvement has been going on 
since 1874. I think that we fell to the bottom at the first drop, and 
that in three months after that we had begun to recover and continued 
to recover during the whole of 1874. 

The Chairman. In the coal region of Pennsylvania, and particularly 
in the district that I represent in Congress, and where I have the most 
interest, the suspension of carrying on coal operations had the effect of 
reducing real estate in town and country to the extent probably of some 
50 or 75 per cent. Give me your idea as to what produced so great a 
shrinkage in real estate % 

Mr. McArthur. A part of that shrinkage may be local, and there 
may be local causes for it. I believe it is generally observed to be true 
that, in times when prices are rising, real estate is generally the last to 
feel the effect of the rise, and that, when real estate begins to go down, 
it goes down the lowest. That is so essentially in town property. That 



170 DEPRESSION IN LABOR AND BUSINESS. , 

is a generally observed phenomenon. There may be local causes for the 
depreciation of real estate in your district with which I am not familiar. 

The Chairman. Has not a great portion of the capital that has 
been invested in business operations in this country been the capital of 
New England, which was sent on here iu prosperous times: and has not 
the enforced collection of those debts had a good deal to do with the 
depression of business in the Western States ? 

Mr. McArthur. So far as I know, the Eastern capital that has been 
loaned in the West has been loaned on bond and mortgage. 

The Chairman. At what rates of interest % 

Mr. McArthur. The rate used to be 10 per cent., I think; it is some 
what less now. I was told by a well-known business man in New York 
not long ago that they had concluded to make all their loans payable in 
gold, and that although they might loan money at a less rate of interest, 
they would get paid iu better money than the money current at the 
time. 

The Chairman. Have those mortgages been generally foreclosed? 

Mr. McArthur. So far as I know they have been generally con- 
tinued, shaved, or paid off. 

The Chairman. There has been no hard pressure for their collection? 

Mr. McArthur. There has been a great shrinkage in the value of 
farm property. A gentleman in Iowa, a relative of mine, went out there 
young, bought a large tract of land, paid half the purchase money, 
gave bond and mortgage on the other half, improved the property, went 
into farming, put up buildings, and has managed to pay the interest on 
the mortgage, and he savs that he could just about sell the land now 
for the face of the mortgage. There are a great many more doubtless, 
in that position, having mortgages on their land equal to the value of 
the land. 

The Chairman. Was it a general thing for those people who are en- 
gaged in agricultural pursuits to borrow money to carry on agriculture! 

Mr. McArthur. Not quite for that, but in all new countries — Indiana 7 
Illinois, Iowa, and more particularly in Nebraska and Oregon, where 
land is cheap and where, ordinarily, land appreciates in value, men can 
pay rates of interest for money which cannot be paid elsewhere. They 
can buy lauds at the low rates at which lands go in ordinary times, and 7 
by borrowing a considerable part of the purchase-money, they cau agree 
to pay and can pay larger rates of interest than can be paid in almost 
any other branch of business, and for the simple reason that the settle- 
ment of the country, without any act of their own, causes the property 
to enhance in value, and makes their holding of it profitable. That 
was one reason why so many loans were taken all over the West. So 
far as my observation goes, although these lands have shrunk largely 
in value, they have not generally sunk below the value of the mortgages^ 
and while the persons who made the loans have to pay in the products 
of their labor a good deal more than they anticipated, and a good deal 
more than the government ever ought to have compelled them to pay 
(for it ought not to have interfered with contracts by changing the 
money), nevertheless, as a general rule, the debts will be paid. 

The Chairman. I thought I understood you to say that the shrink- 
age of real estate in cities was larger than in agricultural districts. 

Mr. McArthur. Yes; that is my general information. 

Mr. Sherwin. If we had recovered from the panic in 1874, why have 
we not prospered since % 

Mr. McArthur. Since that time we have been at work making our 
exchanges, or attempting to do so. We had money which has been.con* 



DEPRESSION IN LABOR AND BUSINESS. 171 

tinually increasing in value, and if we continue tied to gold, we shall 
continue to be tied to such money. Whenever money increases in value 
the prices of all other things must go down, money being the measure^ 
of values. During a period when money is increasing in value and when 
prices of other things are falling, the difficulty is to carry on business at 
a profit. A manufacturer buys his raw materials to-day at the prices of 
to-day, he hires his labor at the prices of to-day, and bv the time he gets 
his manufactured wares ready for the market, the cost of them, if not 
exceeding the market price at the time, is at least a good deal below his 
reasonable anticipations. The man who holds the goods when he comes 
to sell, is in the same plight. By the time that he is ready to dispose 
of them, they are worth less than he gave for them. If he gave his note 
for them, he has got to pay for the note more than he expected to pay, and 
the consequence is the more or less going into bankruptcy. The manufac- 
turer not only loses by the change of the value of the commodity com- 
mencing at one price and ending at another price, but he loses by the fail- 
ure of his debtors. In this way business cannot be carried on, and hence 
production stops and the power of consumption stops. The ability of 
the people to consume stops also. During all the period of activity in 
business labor was fully employed, all the machinery for the production 
of wealth was running well-nigh all the time, producing more of all that 
constitutes wealth per capita than it has been doing since. Since then 
mills have been idle, laborers have been out of employment, hundreds 
and thousands of tramps have been manufactured. Men have become 
tramps first from necessity, then from choice. This arose from disturb- 
ing this measure of value, money ; changing this yard-stick. I conceive 
that nothing but necessity ever justified the inflation of the war times. 
I do not think that it was proper for the government to change the 
measure of values at all. But during the war an extreme necessity arose 
for a change of the measure of values, and the measure was changed. 
The needs of the government were then made the measure of values. 
They were the yard-stick by which all transactions were to be settled. 
But I say that it was not only unwise but was wicked on the part of the 
government to change that measure afterwards by its act. It had no 
right to do it. A change of the measure by which a contract is to be 
settled is a change of the terms of a contract. 

Mr. Sherwin. Supposing the government had not passed the re- 
sumption act, would not this same change in the condition of trade 
have taken place ? 

Mr. McArthur. I think not. In my judgment, the cessation of the 
investment of foreign capital is accountable for but a small part of the 
depression which has followed since. If the resumption act had not 
been passed, and if the question of money had remained stationery, I 
thiuk that with the restoration of private credit, which had begun in 
1874, money would have, by simply a limitation iu quantity, appreciated 
finally to par, because if the quantity of money did not increase as popu- 
lation and business increased, the necessities for use of money would 
have been such that, by the simple limitation of its volume, we would have 
reached equality between coin and paper. I do not think we would 
have had as active business after 1871 as we had for some time before, 
even if the resumption act had not been passed. 

Mr. Sherwin. You think that there would have been some depres- 
sion ? 

Mr. McArthur. Yes; the cessation of foreign investments here was 
a cause of the depression not to be ignored, although it was not an im- 
portant one. 



172 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Sherwin. The amount of circulation in 1874 was larger tban the 
amount in 1873? 

Mr. Mc Arthur. It was — not much, but a little. It was increased 
by ten or twelve millions that was put out during the panic. 

The Chairman. What is your remedy for the evil ? 

Mr. McArthur. First, restore silver to its place as a money mate- 
rial ; make its coinage free. Let the value of money be regulated by 
nature, and not by Congress. 

The Chairman. That is, according to its intrinsic value as a metal? 

Mr. McArthur. Not so at all. Let the quantity of money which 
anybody sees fit to coin regulate its value. Its value is to be regulated 
by its quantity anyhow. The quantity on the one hand and the uses 
on the other will regulate its value. Let it be free, so that whoever 
sees fit to coin may coin, and then its value will not be determined by 
law-. I would make coinage unlimited, most decidedly. 

Mr. Sherwin. At what rate would you fix the silver dollar % 

Mr. McArthur. At 412J grains. That is the dollar which we agreed 
to pay whenever we contracted to pay coiu. I would do one other 
thing. So long as the government owes the debts that it owes now, I 
think it quite proper that it should have the benefit of as large a circu- 
lation of paper money (without interest) as can be kept afloat at par 
with coin. To do that, I would keep at least the present volume of 
greenbacks in circulation, as they are not kept now, although thelaw ( says 
they shall be kept. 

Mr. Cowgill. What do you mean by saying that the greenbacks are 
not kept in circulation ? 

Mr. McArthur. I mean that the law of 1878 requires the present 
volume of all the United States legal-tender notes that come into the 
Treasury to be paid out again and to be kept in circulation, with the 
single qualification that the Secretary of the Treasury may issue in lieu 
of mutilated notes other notes of the same denomination, and it further 
provides that every law inconsistent with that law is repealed. Now, 
as I read it, the Secretary of the Treasury has no right to do what he 
is doing now. He is receiving greenbacks on deposit. His last report 
shows that at that date some thirty millions of greenbacks were hoarded 
in the Treasury, for which certificates of deposit were issued. Now, if 
you deposit money in a bank and receive a certificate of deposit there- 
for, that money continues in circulation. It is not withdrawn. But 
when you deposit money in the Treasury, the money is tied up and is 
withdrawn from circulation. 

Mr. Cowgill. Would it be any better if it were put in a private safe ? 

Mr. McArthur. A man may do what he pleases with it, but the gov- 
ernment should not be its custodian. 

Mr. Cowgill. How would it affect the business relations of the com- 
munity differently whether it |is deposited in the Treasury or deposited 
in any other place where it is not used and does not go into circulation f 

M. McArthur. No one can prevent any one who chooses to burn up 
his money or to lock it up or do what he likes with it ; but if a man puts 
his money in a bank for security the bank will pay it out the next day, 
and it will thus be kept in circulation. But it is not so with money 
placed in the Treasury. 

Mr. Cowgill. The national-bank currency is just as good for all pur- 
poses of money as the greenback currency, is it not? 

Mr. McArthur. Substantially. 
P Mr. Cowgill. Then is it not a fact that good paper can be discounted 
for all the money that anybody can use profitably in this country ? 



DEPRESSION IN LABOE AND BUSINESS. 173 

Mr. McArthur. Yes, all the rnoney for which there is now a demand. 

Mr. Cowgill. Is there not money enough to supply all the demand 
for money if a repayment of it could be secured ! 

Mr. McArthur. Very likely. 

Mr. Cowgill. Then what odds does it make whether the money is 
deposited iu the Treasury or not? 

Mr. McArthur. Because money that is deposited in the Treasury is 
just the same as if it was out of existence. 

Mr. OowGriLL. But what difference does it make, if there is another 
kind of money' in existence which is equally as good and which can be 
furnished to all who have use for it, and can give security for its repay- 
ment ? 

Mr. McArthur. There can be borrowed, no doubt, all the money that 
can be profitably used, but there are other conditions which preclude 
the profitable use of such capital.. That is the answer which I made to 
you a moment ago., 

Mr. Cowgill. Do not those conditions apply equally to the use of 
Treasury notes f 

Mr. McArthur. Treasury notes are but an instrument. 

Mr. Cowgill. We are now talking about the manner of getting hold 
of money with which to do business. 

Mr. McArthur. If money is not lodged in the Treasury, and if it is 
kept anywhere else, there will be an inducement to put it into circula- 
tion. 

Mr. Cowgill. If some other men or associations have an equal amount 
of equally good money as the greenbacks that are lodged in the Treasury, 
how does the deposit of the greenbacks in the' Treasury affect the in- 
terests of the country ! 

Mr. McArthur. There is this very great difference, that if the money 
was deposited in bank it would be for the advantage of the bank to get 
it into circulation; but it is not for the advantage of the Treasury to 
do so. 

Mr. Cowgill. Is it not for the advantage of the banker to have his 
national- bank cunency put into circulation, and if it is profitable for him 
to do so, will he not get more currency and consequently put it into cir- 
culation if it can be profitably used "l 

Mr. McArthur. But I say that it cannot be. If you would place 
greenbacks anywhere else than under lock and key in the Treasury, 
more or less of them would reach circulation, even if it was not so profit- 
able to use money. 

Mr. Cowgill. You mean that if a man could not put his money in 
some place where it could not be secure, he would be more careless 
about it, and would make more reckless investments ? 

Mr. McArthur. I said no such thing. I said that if a man had not 
got the Treasury to put his money in, it would be his interest to put it 
where it would get into circulation ; but money that is locked in the 
Treasury does not get into circulation. Read the law and tell me by 
what authority the Secretary of the Treasury receives $30,000,000 in 
greenbacks and locks them up in the Treasury, issuing certificates of 
deposit for them. By what right is he issuing $5,000 and $10,000 notes 
when the law says he shall only issue notes of the denominations then 
in existence, and when the law says he shall redeem them in any kind 
of money that the creditor may want. 

Mr. Cowgill. We are not here to impeach the Secretary of the Treas- 
ury. This committee has nothing to do with that. 



174 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Mo Arthur. Very well; but I think, nevertheless, that the Secre- 
tary is violating the law. 

The Chairman. "You were proceeding to state the remedies. 

Mr. McArthur. Yes. I would try to get a law passed to keep the 
present volume of greenbacks in circulation. 

The Chairman. And you would pass the Warner silver bill ? 

Mr. McArthur. Yes, or its equivalent. 

The Chairman. What else would you do ! 

Mr. MO Arthur. I think the time is close by when either the green- 
back currency or the national-bank-note currency will get out of circula- 
tion. As the law stands now, I think that the greenbacks will goto the 
wall. 

The Chairman. Ought they go to the wall ? 

Mr. McArthur. No, sir ; the government ought to have the benefit 
of all the circulation that the country can absorb on a par with coin ; 
first, because it will save interest on that much debt,. and after that for 
another reason. Now, to prevent that thing, and it is close by (I mean 
that contest as to which paper shall be kept out), I would make bank 
notes payable in coin. Then I would have no fear of the greenbacks. 
I think we could circulate at par with coin a larger volume of green- 
backs than we now have in circulation ; but I do not propose to raise 
that question now. 

Mr. Martin. Ought the present volume of currency to be increased 1 

Mr. McArthur. I think it might safely be increased if it was made 
payable in coin. 

Mr. Cowgill. Do you intend to give them the legal-tender quality, 
too! 

Mr. McArthur. Certainly. 

Mr. Martin. Would you give the legal-tender quality to national- 
bank notes that are not payable in coin % 

Mr. McArthur. I said that, in my judgment, if national-bank notes 
were payable in coin so that to the extent that they circulate at all they 
would circulate in place of coin and not in place of greenbacks, in that 
case a larger volume of greenbacks than we now have in circulation 
could be maintained in circulation at par with coin, and not otherwise. 

Mr. Martin. The national- bank notes not being payable in coin, you 
do not think that their circulation should be increased ? 

Mr. McArthur. I would not recommend it. I think that Congress 
has tinkered too much with the currency and that it had better not 
tinker any more with it. 

Mr. Sherwin. Why do you say that Congress had better not tinker 
any more with the currency % 

Mr. McArthur. Because I think that the value of money should not 
be regulated by law. 

Mr. Martin. You would not increase the currency unless that cur- 
rency could be floated at par % 

Mr. McArthur. No, sir ; for the simple reason that I should object 
to changing the value of money. The same objection that exists to in- 
crease the value of money exists to bringing it to a lower value. I do 
not think that Congress has any right to change the value of money by 
law, because that is equivalent to changing the terms of their contract. 

Mr. Martin. You would not then retire the national bank-notes ? 

Mr. McArthur. I think they will retire themselves, if you do the 
simple thing that I ask you. 

The Chairman. Do you not think that, under our present banking 
law, it is the duty of the government to furnish the country with the 



DEPRESSION IN LABOR AND BUSINESS. 175 

necessary currency to transact the ordinary business interests of the 
country q . 

Mr. McArthur. I think it the duty of Congress to furnish the money 
to the country, to stamp coin, and to furnish the paper currency so 
far as it can be done within those limits. It is simply a question of 
policy whether Congress ought to allow money to be furnished by cor- 
porations. I do not think it politic for the government to surrender its 
right to issue money. If the government had no debt, I should say 
that it should keep out of the issuing of paper money entirely; but the 
government has a large debt, and by issuing a paper money it saves 
that much interest. I do not think that the government should so in- 
crease the issue of greenbacks as to depreciate their value below the 
coin standard. I wish to get back to the old landmark of the fathers 
and to stay there. I think that is the best thing. 

The Chairman. Who is to judge of that stand-point? 

Mr. McArthur. That will take care of itself if you make the 
coinage of silver free and make the silver dollar the unit of value. 
There is another way of taking care of that value. It is a question of 
policy. If human wisdom were equal to the task of proportioning money 
to business so as to keep the proportion always constant, then a cheaper 
money than coin is jusl as good as coin, and governments might furnish 
it. But that is not within human wisdom. The nearest approach to it 
would be that the quantity of money to be furnished should be a given 
amount per capita. That is, perhaps, the best way to get at it. A bet- 
ter way still would be to have the quantity of money proportionate to 
the wealth of the country; but that could not be got at so easily. If 
Congress should furnish paper money at so much per head of the pop- 
ulation, it would probably not fluctuate much, or any, in value, because 
its use would keep pace evenly perhaps with population. The quantity 
of money required- for our population would be far too small for the 
French, or other populations, but I think a suitable mean can be arrived 
at in that way. 

The Chairman. Do you entertain the opinion that there can be pos- 
sibly a better currency furnished to the people of this country than the 
legal-tender currency % 

Mr, McArthur. No better paper money can be furnished ; and if it 
were possible for human wisdom to proportion the quantity of money 
to business, no better money could be furnished for all purposes of in- 
ternal commerce. 

The Chairman. On the face of the legal-tender note there is nothing 
to show that it is based on coin. 

Mr. McArthur. No matter, if it is never to be paid. If for any 
cause people generally accept a money, if it is generally received and 
accepted in exchange, then its value depends on its quantity on the one / ' ~< 
hand and on the use for it on the other hand. These are the two con- 
ditions which determine its value. We see (and it is a curious phe- 
nomenon) that people take money without any expectation that it is 
ever to be paid in anything else, but it is no less curious that people 
take metallic money which has less value than its face value. 

The Chairman. Which do you regard as the best papper money of 
this country, legal-tender notes or national-bank notes °? 

Mr. McArthur. Legal-tender notes, decidedly. 

The Chairman. Why? 

Mr. McArthur. In my judgment, if you fix a volume of legal-tender 
money (even though it be irredeemable) and have the quantity no larger 
than would circulate at par or nearly at par with coin (that can be 



176 DEPRESSION IN LABOR AND BUSINESS. 

regulated by its quantity), it would have oue very great advantage over 
metallic money. Metallic money being the international money, the 
material in which we settle international balances, whenever there is an 
adverse balance of trade which we have to settle abroad, that balance is 
taken from our money and the price of money goes up, and that puts the 
prices of everything else down. The money that goes abroad affects the 
prices of everything. For every dollar of gold that goes abroad prop- 
erty shrinks in value. ls T ow, with an inconvertible money you have 
this advantage, that your money volume will remain here and prices 
generally will not be disturbed. The commodity of gold or silver may 
go up or down, but it will not disturb values generally. Hence there is 
a very decided advantage in not using metallic money if you can fix a 
volume of money that. will remain equal and stable in value. 

Mr. Cowgill. Do you believe it possible to fix that kind of, paper 
money which is irredeemable % 

Mr. McArthur. I take it that we must continue to have a greenback 
circulation so long as the government lasts. 

Mr. Cowgill. Why was it that greenbacks were so much depreciated 
in value at one time l 

Mr. McArthur. Because there was such a volume of greenbacks 
issued in proportion to the business they had to do. That was the cause, 
and that alone. 

Mr. Cowgill. Was it that, or was it because there was a class of 
men in the country who had no confidence in the ability of the govern- 
ment to redeem with currency % 

Mr. Mc Arthur. So long as it circulates as money at all the question 
of confidence does not enter into it. 

Mr. Cowgill. And is it not a fact that nearly half of the whole com- 
munity at that time, as fast as they could get greenbacks, invested them 
in anything so as to get rid of them f 

Mr. McARTHUR. Xo; that was not it. 

The Chairman. Those are the only remedies you have to suggest 1 

Mr. Mc Arthur. These would be my remedies : to restore silver, to 
save the greenbacks, and to make bank notes payable in coin. 

Views of Mr. Frank (i. Thompson. 

Mr. Frank G. Thompson appeared before the committee as a volun- 
teer witness. He stated that he was a worki ngmau. He would not 
go into an argument about currency, as that was a question about which 
people differed in regard to whether it was responsible for the hard 
times. There had been a large amount of currency in circulation dur- 
ing the war, and yet the prices everywhere were high. The American 
laborer desired an increase of currency which would give him more 
food and clothing. He demanded only such an inflation of the currency 
as that the greenback could be kept at par with gold. Any other infla- 
tion or expansion of the currency would be detrimental to his interest. 
There must be a currency equal to the demand of trade, but that cur- 
rency must be based on real value and must be redeemable in gold or 
silver. 

The Chairman. You are decidedly a hard-money man f 
Mr. Thompson. 1 am in favor of the Warner silver bill. I am a bi- 
metallism You can scarcely rind a workingman in Chicago who is not 
a bi-metallist. We are in favor of that currency that has value. We 
are law abiding citizens, and are all the architects of our own fortune. 
The man who grumbles at this country not giving him a living should 



DEPRESSION IX LABOK AND BUSINESS. 177 

certainly not call rue country bis own, and is not deserving- of having 
such a country. The man who has ambition and energy to work for a 
living will certainly never starve in this country. We are told that 
there are 600 members of a communistic organization in this city — in 
organization that sprang ap in France. It sprung into existenc > from 
debauchery and vice. It sprung up among the people who took a har- 
lot from the streets and proclaimed her the Goddess of Reason. There 
are men trying to inculcate the same teachings in this country, but they 
will fail in the attempt, because the working classes of this country are 
too intelligent to believe in any such system. It is true that at the last 
electiou there were about 11.000 votes cast for the ticket supported by 
the socialists, but it was because Democrats would not vote for their 
own candidate, and threw their votes away. Another thing that I re- 
gard as being the caase of depression and hard times in this country is 
the anarchy that exists in the South. I am opposed to labor unions. 
In Great Britain labor unions paralyzed industry. If you go to Great 
Britain to-day, you will see hundreds of starving women and children, 
owing to the fact that their husbands, their natural protectors, are bound 
by their adhesion to trades unions to starve rather than work. 

The Chairman. What remedy do you propose for the present depres- 
sion ! What would you have Congress do in the matter ? 

Mr. Thomson. I would simply have Congress pass the Warner bill. 
Any member from this city who does not vote for it will never go back 
to Congress. 

The Chairman. What other remedies do you propose ? 

Mr. Thompson. I would have a law passed preventing any contrac- 
tion of the currency more than is necessary. 1 have read John Sher- 
man's speech ; part of it suits me and part does not. Let us have as 
much currency as we can have without endangering the value of the 
paper dollar. I would have the paper dollar convertible into gold and 
silver. 

The committee here adjourned until to-morrow at 11 o'clock. 



Chicag-o, July 31, IS 79, 
Views of Mr. John M. Clark, 

Mr. John M. Clark appeared before the committee at its invitation. 
He said, in reply to preliminary questions, I live in Chicago; I am en- 
gaged in manufacturing leather; I have resided in Chicago nearly all 
my life ; I have been here over thirty years; I have been in the leather 
business thirteen or fourteen years ; I employ in the business from one 
hundred to three hundred men, varying at different seasons of the 
year. 

Mr. Sherwin. Please state to the committee the condition of your 
branch of business in this State, and in this portion of the country, so 
far as you know. 

Mr. Clark. The demand for our production is all that we could ask 
for. There is no specially large margin in profits; but the business is 
very good. The business is good, but the profits are small. 

Mr. Sherwln. How is the volume of business now, compared with 
that of a year or two ago ? 

Mr. Clark. Perhaps it is not quite up to what it was two years ago. 
I think it is about the same as it was one year ago. I am speaking 
from our own experience, but I think that that is the experience of all 
the trade. 

H. Mis. 5 12 



178 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Sherwin. Are there indications of better times now ? 

Mr. Clark. I think there are. 

Mr. Sherwin. What are these indications? 

Mr. Clark. Nearly all of the unsound houses in the business have 
gone by the board, and there is an evidence of steady and better de 
niand for goods. 

Mr. Sherwin. Where are your sales made chiefly ? 

Mr. Clark. Our individual sales are made almost altogether in New 
England. 

Mr. Sherwin. Judging from your customers, what would you say as 
to their solvency ? 

Mr. Clark. Our customers are selected, as it-were, and nearly all of 
them discount their own bills. 

Mr. Sherwin. Should you judge that there was any change for the 
better or for t he worse, in their ability to pay now from what that 
ability was a .Near or two ago? 

Mr. Clark. I should think perhaps that their ability to pay now is 
better than it was a year ago, although we have had no trouble in that 
line ourselves for some time. 

Mr. Sherwin. Were you in business before the war? 

Mr. Clark. No, sir. 

Mr. Sherwin. Then you cannot compare business now with what it 
was then ? 

Mr. Clark. No, sir. 

Mr. Sherwin. Have you any idea as to the general busiuess in this 
city as compared with one year ago? 

Mr. Clark. Judging trom the evidences that I see about me, I think 
that business is better now than it was a year ago. 

Mr. Sherwin. Can you refer to any special case or cases that would 
be an example of that? 

Mr. Clark. 1 notice that the bank clearings are larger every week 
than they were during the corresponding week a year ago. I notice 
that the receipts of the railroads are better, and that laboring men are 
getting better wages. 

Mr. Sherwiin. Do you know anything about the building business in 
this city? 

Mr. Clark. I know a little in regard to one building in which I am 
interested ; that is the Chicago Central Music Hall on State street. I 
think that that is one good illustration of the change in times between 
now and a year ago. We had all our plans for the construction of the 
building a year ago, and we advertised for bids and received bids for 
all the different classes of work, but the organization of the company 
was not perfected, and the bids could not be let until this spring. Then 
we advertised again, and had bids from the same contractors in the 
different classes of work, and those bids averaged ten per cent, higher 
than the bids for the same work last fall, making a difference of nearly 
$13,000. 

Mr. Sherwin. Have you had, during the past few years, many appli- 
cations trom laborers for employment? 

Mr. Clark. Yes, sir. 

Mr. Sherwin. Applications trom men whom you could not employ ? 

Mr. Clark. Yes. 

Mr. Sherwin. How has it been in that respect this year ? 
Mr. Clark. We have had very few such applications this year. We 
are having a good deal of difficulty in getting men to do the work. For 
common labor it is almost impossible to get the men. We have had our 



DEPRESSION IN LABOR AND BUSINESS. 179 

dock piled full of bark for weeks from inability to get men to move it 
as fast as the bark arrived. 

Mr. Sherwin. Do you know what wages are now, as compared with 
wages iu 1860? 

Mr. Clark. I do not. 

Mr. Sherwin. Do you know what wages are now, as compared with 
wages iu 1872-'73 ! 

Mr. Clark. I cauuot tell without referring to books; I know that we 
are paying larger wages now than we were last year; about 10 per cent, 
greater. 

Mr. Sherwin. Do you think it is true in all kinds of business, so far 
as your observation goes, that the sales this year are greater, but the 
profits are smaller? 

Mr. Clark. I think that it is generally true in business that profits 
are smaller, but that the demand for almost everything is getting 
greater. 

Mr Sherwin. What is the reason for the sinill profits % 

Mr. Clark. During the severe depression that we have passed 
through all business was brought down to almost as close a margin as 
it could be, and this margin is still close. 

Mr. Sherwin. Could business be done profitably if the prices of la- 
bor were 10 per cent, greater than they are now? 

Mr. Clark. Au increase in wages would necessitate a rise in the price 
of the manufactured article. 

Mr. Sherwin. What would be the effect of that rise on business here 
provided the same change was not made iu all parts of the couutry ? 

Mr. Clark. I do not think that we could advance our prices here un- 
less they were advanced elsewhere. 

Mr. Sherwin. Is there any trouble as to the amount of money in cir- 
culation here ? Do the manufacturers require any more money in circu- 
lation? 

Mr. Clark. I have seen no evidence that they do. 

The Chairman. Then you think, on the whole, that you are getting 
over a great trouble, and that business is assuming a prosperous condi- 
tion i 

Mr. Clark. 1 think there is no doubt of that. 

The Chairman. You are on the mend ? 

Mr. Clark. Undoubtedly. There is every evidence of it. 

The Chairman. Do you think that that statement applies to all 
branches of trade ? 

Mr. Clark. I do, so far as my observation has gone. I have spoken 
to different persons, and their experience is generally about the same. 

The Chairman. What price do you pay for ordinary unskilled labor? 

Mr. Clark. $1.25 per day. 

The Chairman. What do you pay for skilled labor? 

Mr. Clark. All the way from $10 to $25 a week. 

The Chairman. Then you think that there is an opportunity for every 
man in this city to be employed — I mean every laboring man, who seeks 
employment? 

Mr. Clark. There may possibly be some branches of skilled labor in 
which it is difficult to get employment. I do not know of any. We 
have had more difficulty in getting unskilled labor this summer than in 
getting skilled labor. 

The Chairman. You speak only iu regard to the branches of busi 
ness in which you are engaged? 

Mr. Clark. We had a fire in our factorv a while ago. and iu rebuild- 



180 DEPRESSION IN LABOR AND BUSINESS. * 

ing the factory we were in a great hurry to push things along, but our 
contractors told us that they could not do the work any faster because 
they could not get the men. 

Views of John F. Scanlan. 

Mr. John F. Scanlan appeared before the committee as a volunteer 
witness. He said, in reply to preliminary questions, I have lived in 
Chicago since 1851. I am an ornamental carver by trade. I was for 
ten years a merchant iu the wholesale confectionery business. I was 
engaged for three years in dealing in brick and building materials. Just 
now I have no business, except some private interests of my own. 

The Chairman. Are you familiar with the labor question ? 

Mr. Scanlan. I gave it a good deal of attention for ten years. 1 
have employed from 100 to 125 persons for nine years. 

The Chairman. In what branch of business? 

Mr. Scanlan. Manufacturing confectionery and in the brick and ma- 
terial business. 

The Chairman. Has the question of labor varied within the last ten 
years? 

Mr. Scanlan. It has varied very much. 

The Chatrman. What was the worst time for labor during the pres- 
ent decade ? When was labor the most depressed ? 

Mr. Scanlan. 1 think in the last three or four years, immediately 
after the panic of 1873. The district in which I live is largely made up 
of working men. I have inquired of the retail dealers as to the effect 
of the panic, and they stated to me at that time that their trade fell off 
at least 33 per cent, in a month. Since that time there have been a great 
number of unemployed men, and wages have fallen very much. 

The Chairman. Up to what time do you fix the greatest depression ? 

Mr. S< anlan. It continued until immediately before the opening of 
this summer. 

The Chairman. Then, as a general thing, labor has been very much 
depressed during the last seven years 1 ? 

Mr. Scanlan. Yes ; since 1873. 

The Chairman. Is it improved now ? 

Mr. Scanlan. I think it is slightly on the improvement. 

The Chairman. Is there any considerable number of laboring men 
out of employment in this city at the present time ? 

Mr. Scanlan. There is a considerable number out of employment at 
the present time. I have a friend who has been a foreman ou street 
works, and he has given me the result of his experience. Two or three 
years ago a large number of laboring men depended on street em- 
ployment, and he has cnanged his men as often as once a week and 
twice a month, in order to give them all a chance of work ; he has known 
instances where, when he wanted twenty or thirty or forty men, he has 
had three or four hundred men at his door. He has come to my house 
and said that he had to run away from men applying for work, as 
he could not employ them all; and his wife has told me that she has 
had to empty ail the cupboards in the house to give these poor men 
bread. 

The Chairman. How many men are engaged in this street work ? 
Mr. Scanlan. Last year this friend of mine employed from forty to 
sixty men in his district. This year he employs. from twenty to forty- 
five. His district consists of three wards. The wages of the men are 
now a dollar a day. 



DEPRESSION IX LABOR AXD BUSINESS. 181 

The Chairman. State whether there is employment in the city of 
Chicago for all the laboring men that are now here ! 

Mr. Sca.nl an. I do not think there is. 
"The Chairman. What proportion of them fails to get employment ■ 
£?Mr. Scanlan. I had occasion to make out a list of a certain number 
of trades for the government last fall. One of the officers in the State 
Department at Washington asked me to fill oat a paper in regard to a 
certain number of trades showing the amount of wages, received, and 
the cost of family supplies. I did so last fall. At that time the esti- 
mate was that at least one-third of the entire working population of Chi- 
cago was constantly idle. The condition of things has improved a little 
siuce. 

f he Chairman. You think that at that time, of the working men 
of this city, the number out of employment was about one-third f 

Mr. Scanlan. Yes; the condition of things is improved some this 
year. The only two trades whom I found entirely employed, or pretty 
fairly employed, are the saddlers and harness makers, and the book- 
binders. That was early last fall, at a time which we consider a busy 
season here. 

The Chairman. Have you any idea as to a remedy that can be 
afforded by general legislation for the relief of laboring meu ? 

Mr. Scanlan. Yes; I have an idea. -For the last ten years I have 
given this question ot labor and political economy some attention. I 
Tvas engaged in business for ten or twelve years previous to that, aud I 
think I knew as much about business matters here as most busiuess 
men — which is nothing. I took no cognizance at all of the effect of the 
volume of currency on the general wealth of the commuuity. Since 
that time I have given attention to the subject, aud I am perfectly sat- 
isfied that the cause which has always wrecked us is poor money, and 
an insufficient volume of currency. 

The Chairman. What do you mean by " poor money " ! 

Mr. Scanlan. Within the last seventy years we have had ten panics, 
lu each instance the panic was caused by something beiug the matter 
with the money. There was no natural cause for it. We had peace, 
plenty, and good health at all these periods. Our money has been based 
on coin, but 84, $5, 810, and 820 in paper (and in one instance, in Con- 
necticut, 823), have been issued for every dollar in coin ; and just as soon 
as the people found it out they rushed to the banks and brought on a 
panic. We are still continuing that system of money on a coin basis. 
and in tryiug to get at that coin basis we have co.itracted the volume of 
currency to a point that is insufficient to carry on the commerce of the 
country, and to employ all the people. Hence a stagnation in trade. 
The cure for that is an unlimited coinage of gold and silver with certifi- 
cates, and an additional amount of paper money based on the faith of 
the entire wealth (not a portion of the wealth) of the government. 

The Chairman. What remedy would you propose to give relief? 

Mr. Scanlan. An unlimited "coinage of silver, the issue of silver cer- 
tificates, and an additional issue of paper money, issued on the faith of 
the entire wealth of the government. 

The Chairman. On the question of tramps. Are tramps, as a class. 
meu who are out of employment, or are they vicious men who are 
tramping through the country for the purpose of marauding ? 

Mr. Scanlan. Those men who have applied at my house for food L 
have found to be a fair average of American citizens. In two or ihree 
instauces tramps who have sat at my table have said grace, which is 
somethiugl very often neglect myself. 



182 DEPRESSION IN LABOR AND BUSINESS. 

Views of Mr. IS. F. Norton. 

Mr. S. F. Norton appeared before the committee as a volunteer wit- 
ness. He said, in reply to preliminary questions, I have been a resident 
of Chicago for twelve years ; I have been practicing law ten years ; I 
was a journalist about nine years. 

The Chairman. Give us your idea as to the causes of the present 
hard times, and as to the remedy. 

Mr. Norton. The contraction of the currency has brought the hard 
times, and the only remedy that 1 know of is the increase of the volume 
of currency. 

The Chairman. To what extent would you increase the volume of 
currency I 

Mr. Norton. If I could impress upon Congress, in the first place, the 
necessity for an increase of the volume of currency, I would run the risk 
of the wisdom and patriotism of Congress to decide as to the amount. 
I would say that there should be a gradual increase of the currency 
until prices were restored to the figures which existed at the time the 
present volume of debt was created. 

The Chairman. Do you attribute the cause to the contraction of the 
currency ? 

Mr. Norton. I do ; directly or indirectly. There may have been 
some minor causes, but I cannot think of anything else that would pro- 
duce the depression in labor and business which we have experienced 
for the last five years except the contraction of the currency. 

The Chairman. What is the condition of labor in this city at present f 

Mr. Norton. I examined the other day the statement that lias been 
submitted to the committee, and I think that that statement as handed 
in by the trades union is substantially correct. I think there has been 
a reduction in the wages of about 40 per cent. 

The Chairman. Is there an opportunity in this city for laboring men 
who seek employment to be employed ? 

Mr. Norton. Not so far as my observation goes. I think there are 
a great number of unemployed men, in fact I know that there are. 
That is a noticeable and notorious fact. 

The Chairman. To what do you attribute the shrinkage in real es- 
tate in this city ? 

Mr. Norton. To the contraction of the currency, of course. A con- 
traction of the currency brings about a reduction of prices. 

The Chairman. The great fire in Chicago, of course, had a large ef- 
fect on the depression of real estate in this city i 

Mr. Norton. I do not thiuk that it had. Real estate here has im- 
proved more since the tire. There are better buildings here now than 
there were then. I do not know why the fire sh mid produce a depre- 
ciation in real estate particularly. I think that on the whole the city 
has been benefited by the fire. 

The Chairman. Still the shrinkage in.real estate has been large f 

Mr. Norton. Yes ; but I do not know that it has been any larger 
here than it has been in New York, Boston, and other large cities. 

The Chairman. And your idea is to provide for the misfortunes of 
the past, and for the difficulties of the present, by increasing the vol- 
ume of currency by a direct issue of what — greenbacks or national bank 
notes ? 

Mr. Norton. I should prefer greenbacks. I do not know why the 
government should not receive the benefit of a forced loan o.u the pub- 
lic rather than private corporations. 



DEPRESSION IN LABOR AND BUSINESS. 183 

Mr. Cowgill. Did I understand you to say that the city bad been 
benefited by the fire ? 

Mr. Norton. That is my private judgment. We have had better 
buildings here than we had before the tire, and I think that the city is 
richer in material wealth than it was before the fire. 

Mr. Cowgill. Would you suggest as one of the remedies for the 
present depression to apply the torch to the city again ? 

Mr. Norton. If a man should come to me with his arguments about 
over-production, as men often do, I could not suggest anything else 
than that. I think that the remedy would be equivalent to the dis- 
ease. 

Views of Mr. T. TV. Baxter. 

Mr. T. W, Baxter came before the committee and stated that he had 
beeu requested by Mr. Banning to appear here. In reply to preliminary 
questions he said: "I am the manager of the Elgin National Watch 
Company. Our factory is at Elgin, and our principal office is at Chi- 
cago. We employ about 850 persons, about one-half of whom are 
females. 

Mr. Sherwin. What is the state of trade in your manufactory as 
compared with other times? 

Mr. Baxter. So far as quantity is concerned, it is very prosperous, 
but the prices of the article are very much lower. We are manufactur- 
ing watch movements. 

Mr. Sherwin. How does the volume of business compare now with 
that of previous years % 

Mr. Baxter. As compared with three years ago, it is only as four to 
one. 

Mr. Sherwin. And what are the prospects for the future ? 

Mr. Baxter. The prospects for the future are such as to lead us to 
believe that our principal difficulty will be the supply of the article 
rather thau the sale of it. 

Mr. Sherwin. Has there been any difficulty or complaint in your 
manufacture in regard to the depression in labor? 

Mr. Baxter. I cannot say that there has not been, from the fact that 
in order to produce the goods at a price at which they could be sold, it 
was necessary for us to reduce the wages. But we discovered this to be 
a fact, that while there was a large increase in the amount of labor fur- 
nished (as we do a large portion of our work by the job), there has been 
a very slight decrease in the wages earned by the operatives. 

Mr. Sherwin. What would be the value of the wages obtained now 
compared with the value of the wages obtained three or four or five 
years ago, so far as your factory is concerned f 

Mr. Baxter. Our operators on the average have had their wages 
diminished about 10 per cent, within three years — the wages earned. I 
make a distinction now between wages earned and the work accom- 
plished We have what we call our fiscal year in the company, which 
expires on the 1st of May, and the figures are fresh in my mind. 

Mr. Sherwin. Comparing the purchasing power of the value of the 
wages at present with that of the wages three years ago, now do they 
compare ? 

Mr. Baxter. With the dollar as it stood three years ago, and the 
dollar as it stands to-day, there has been a reduction of ten per cent, in 
wages. 

Mr. Sherwin. Are you acquainted with the general business of the 
city I 



184 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Baxier. I think that tbat would be perhaps too much forme to 
say. I have some general knowledge of business from my intercourse 
with others. 

Mr. Sherwin. Are you acquainted with the laboring classes so as to 
form any judgment as to their condition at present, compared with that 
of a few years back? 

Mr. Baxter. I do not know that I have a right to sa} T that I can 
form a judgment. Still J suppose I have a judgment in the matter from 
my general knowledge, and from my intercouse with others. 

Mr. Sherwin. What would you state to be the general condition of 
business in this city now ? 

Mr. Baxter. I should state that, as a whole, and as compared with 
other places, it is very prosperous — not but that there is want, aud that 
there are men unemployed, but I think that, compared with other cities 
(especially the cities of large size), I should say that our condition in 
Chicago is very prosperous. 

Mr. Sherwin. Do you know of auything that can be done in the way 
of legislation to enhance the prosperity of this city, or the prosperity of 
the laboring men ? 

Mr. Baxter. That is a pretty broad question, and I do not know 
that I would be prepared to answer it without reflection. Nothing oc- 
curs to me now iu the way of legislation merely. 

Mr. Sherwin. In the matter of currency, is there auything which 
you think needs legislative action? 

Mr. Baxter. So far as ray personal judgment goes 1 should say not. 
The best evidence that we have money enough in circulation is the 
cheapness of it. I think that there is money enough, but that the great 
want is collaterals. 

The Chairman. There is not much difference, is there % 

Mr. Baxter. The man who needs the money, and who has not the 
collaterals, discovers that there is a very material difference. 

The Chairman. What was the average number of the men employed 
by you in 1873 and for the five years succeeding? 

Mr. Baxter. I do not know that I can give you the average number 
of persons employed by me previous to 1876, which was the time I com- 
menced my service with the Elgin Watch Company ; but I should say 
that the average was from 400 to 440. 

Mr. Sherwin. About half the number that you have employed now ? 

Mr. Baxter. It is possible that I may overstate it a little, but 1 
am not far out of the way. 

Mr. Sherwin. The general prices of wages were the same then as 
they are now, were they ? 

Mr. Baxter. No; previously to 1876 wages were from 20 to 25 per 
cent, higher than they are now. 

Mr. Sherwin. For the three years succeeding that period, what has 
been your average number of employes? 

Mr. Baxter. Our average number tor the three years taken as a 
whole, I should say, has been about 700. 

Mr. Sherwin. How do your prices now compare with the prices of 
wajjes in 1876? 

Mr. Baxter. There has been a decrease of about 10 per cent, within 
the iast three years as compared with the wages paid before that. But 
there was a decrease of from 20 to 25 per cent, within three or four 
years. 

Mr. Sherwin. Have you been obliged, in consequence of a failure 



DEPRESSION IN LABOR AND BUSINESS. 185 

to sell all your production to reduce the number of yonr employes to 
any considerable extent ? 

Mr. Baxter. No, sir; in order to meet competition in our business 
(mostly felt from the other side of the water, and to some extent domes- 
tic competition), it was necessary to increase the number of watches 
made, and to reduce the prices at which they could be sold, and this 
could only be accomplished by reducing the wages. In reducing wages 
we got an increased amount of labor for the same amount or wages, and 
we accomplished the same purpose. We have always made it a point 
never to reduce the wages more than was absolutely necessary. We 
employ largely by the job. Our aim is to employ as nearly as possible 
all in that way, but thai, of course, cannot be accomplished. 

Mr. Sherwin. What would be the average per diem wages per 
man ? 

Mr. Baxter. That will depend upon his industry. 

Mi. Sherwin. Do you ship watches to Europe? 

Mr. Baxter. We have done so. I am very happy to say that our 
orders do not hold out any inducements for us to do that today. We 
kept an office open in London for four years, and we had an agency in 
Moscow. 

Mr. Sherwin. Has that branch of your business been suspended? 

Mr. Baxter. Yes ; we have closed our offices there. 

Mr. Sherwin. Is yours a branch of the great watch establishment in 
Massachusetts f 

Mr. Baxter. No, sir; ours is the Elgin Watch Company. The es- 
tablishment in Waltham, Mass., is the Americau Watch Company, a 
separate institution. 

Mr. Sherwin. From your observations, you think that business af- 
fairs here are in a promising condition! 

Mr. Baxter. I should say so. 

Mr. Sherwin. And they promise to be in a better coudition ! 

Mr Baxter. Very much so. 

Mr. Sherwin. Notwithstanding they have been very much depressed 
within the last three years? 

Mr. Baxter. Yes. 

Mr. Sherwin. Your sales are largely in our own country ? 

Mr. Baxter. Almost entirely. 

Mr. Sherwin. From your trade, can you form any judgment of the 
solvency of the people, or of their condition compared with what it was 
two or three years ago? 

J(r. Baxter. We deal only with the wholesale jewelers in the couu 
try, and I should say that while as a whole their capital may have been 
diminished, they are in a better ^business standing now than they were 
before. Many things were counted in their assets before which they 
have siuce discovered to be worthless, and these things have been car- 
ried to profit and loss, and have been regarded as worthless. Men know 
their actual condition more nearly than they did before. Therefore, I 
regard them as iu a better business condition, while they might not 
suppose themselves to be worth as much money as before. They know 
more nearly their actual conditiou. 

Mr. Sherwin. That produces acouhdence in the sellers ? 

Mr. Baxter. Xhat, of course, produces a confidence in the seller. 
Our idea has been that the best way to do was to sell goods at small 
profits aud to get good cash for them, and therefore we offer large in- 
ducements for cash rather than extend our credit. 

Mr. Sherwin. In the matter of wages: Supposing that out of every 



136 DEPRESSION IN LABOR AND BUSINESS. 

f? 120 of your sales formerly the laborer received $100, aud that yon 
have a profit of $20. How does your pro lit at present compare with 
that former profit ? That is, what proportion now goes to the laborer 
and what proportion goes to the company a ? 

Mr. Baxter. I should say that our proportion uow, as compared witn 
formerly, is as 20 to 50. That would be a fair answer. 

Mr. Sherwin. And the labor receives more than it received formerly ? 

Mr. Baxter. Yery much more in comparison with the prices than we 
obtain. I mean that as compared with the prices that we obtain for the 
finished product the laborer gains a larger proportion of the amount 
than he previously did. 

The Chairman. Have most of the jewelers in this city failed and be- 
come bankrupt '? 

Mr. Baxter. That is a matter of hearsay on my part. There have 
been, I believe, but three such failures since I have been connected with 
the business in the last three and a half years. We have seventeen 
jewelers in this city with whom we deal. 

The Chairman. And there have been three failures among them f 

Mr. Baxter. Yes. 

The Chairman. With reference to the cause of your stopping ship- 
ment of goods to Europe, has that been because the demand here is 
greater for the article, or because the demand there is less for it I 

Mr. Baxter. Possibly from both causes. We found an increasing 
demand on the other for our goods when we offered the inducements 
that lay in our power lor the sale of our goods in this country, and at a 
better profit than competition permitted us to get on the other side. I 
suppose that that arose partly from the competition between the Ameri- 
can manufacturers of watches in England, the dealers there being will- 
ing to use our companies against each other in order to pull down 
prices, and of course there is a certain amount of feeling on the part of 
those representing companies to effect sales, all of which had a tendency 
to lower prices. 

The Chairman. Then it was not from a want of merit that the de- 
mand abroad ceased ? 

Mr. Baxter. No, sir ; it was simply an idea which the American 
manufacturers had to attempt sales in the English market, and the 
manufacturers ou the other side threw all the obstacles in our way by 
intimidating the case-makers, aud the dealers in the article were only 
too glad to use the American companies against each other and lower 
the prices. 

The Chairman. Does the Waltham establishment continue to ship 
watches abroad '? 

Mr. Baxter. I understand that it does. I understand that their 
London office is. open yet. 

Mr. Sherwin. How many other watch-works manufactories are there 
in this country -? 

Mr. Baxter. There are six altogether, I think. 

Mr. Sherwin. Where are they located? 

Mr. Baxter. There is the American Watch Company, at Waltham, 
Mass.; Illinois Watch Company, at Spriugtield ; the Bock ford Watch 
Company, at Bock ford, 111.; the Hampton Company, of Spriugtield, Mass.;. 
the Lancaster Watch Company, at Lancaster, Pa.; andjhe Elgin Watch 
Company, at Chicago. 

Mr. Sherwin. Has your attention as a manufacturer been called in 
any way to the question of the hours of labor ? 

Mr. Baxter. Yes; that is a matter of which I have thought; a good 



DEPRESSION IN LABOR AND BUSINESS. 1*7 

deal. It has been necessary for me to do so in connection with roy 
business. 

Mr. Sherwin. State your opinion as to the feasibility of the reduc- 
tion of the hours of labor to eight hours, and as to the effect of such re- 
duction, supposing it to be made. 

Mr. Baxter. That might, perhaps, be largely covered by the char- 
acter of the labor. As far as general labor is concerned, I do not be- 
lieve that it is feasible, or that it could be enforced. Neither do I be- 
lieve that a large proportion of the working people desire it. 

The Chairman. You mean by that the unskilled labor ? 

Mr. Baxter. I mean the intelligent labor — the best class of labor 
throughout the country. There is a great distinction between skilled 
labor and the labor of men who are skilled at what they are employed 
at. That distinction must be observed. What I understand a skilled 
laborer to be is a man who is an expert in his line of business, who is 
an expert at one particular calling. You speak of a machinist as a- 
skilled mechanic. I should make a strong difference between that and 
a skilled laborer whose business it was to be employed on one piece. 

Mr. Sherwin. What kind of business would be most likely to feel a 
reduction of the hours of labor I 

Mr. Baxter. I think the class that might be termed operatives, 
rather than mechanics. 

The Chairman. You mean outdoor labor? 

Mr. Baxter. Not necessarily outdoor labor. There are operatives 
in factories ndoors as well as laborers outdoors. A man may be very 
expert and useful and very intelligent, but from force of circumstances 
is compelled, perhaps, to work at one particular portion of a business, 
and I make a strong distinction between that and the man who is 
skilled in that branch of business generally. 

Mr. Sherwin. A good deal has been said before the committee by 
representatives of labor organizations in regard to the hours of labor, 
they claiming that it would be for the benefit of labor generally to 
reduce the hours of labor to eight, mainly on account of the strong 
competition in the labor market, which it is claimed has the effect to 
deprive the laboring man of the work which he otherwise would have. 
Please state your views on that question. 

Mr. Baxter. In the first place, I do not believe a reduction of the 
hours of labor feasible ; I do not see how it can be accomplished; it 
does not seem to me as though legislation could be coined to the extent 
of saying during what portion of the twenty-four hours I may be al- 
lowed to use my property. Supposing I take a building and fill it with 
machinery, costing $100,000, and base my calculations on the use of 
that machinery for ten hours a day, and supposing it is only from the 
use of it for ten hours a day that I can get any return from the capital 
invested, would it not be rather a hardship on me for the law to say 
that, even although I can find men willing to work ten hours a day, I 
shall not be permitted to employ them that length of time. Is that 
within the scope of legislation ? It is perfectly competent for a mm 
whom I want to employ to say that he will not work over eight hours 
a day, but I do not think that it is competent for legislation to say that 
I shall not employ a mau to work over eight hours. It is perfectly 
competent, perhaps, for the legislature to pass a law by which, in the 
absence 01 contract, eight hours shall constitute a day's labor, but I do 
not think that legislation can fix a plan by which \ou can be deprived 
of the right of hiring a man by the hour, and agreeing with him how 
many hours' labor he shall do for me. 



188 DEPRESSION IN LABOR AND BUSINESS 

The Chairman. There never has been an etfort of that kind. The 
eight-hour law that was passed by Congress was a law to fix a day's 
work at eight hours; not to prohibit a man exteuding his work beyond 
that time. 

Mr. Baxter. It seems to me that there is where the difficulty arises 
between workingmen and employers in not understanding each other. 
That is one of the difficulties under which we have to work in this 
country to day. It is the want of confidence between the various inter- 
ests. I think that if business men understood each other better, and 
had more confidence in each other's word, and in our carrying out what 
we undertook to carry out by the contract, we would be relieved of a 
great many of those difficulties under which we now labor ; and I think 
that that would be the means of increasing the wages which we are 
permitted to pay to the laboring classes. The facts are that the labor- 
ing classes are obliged to work for lower wages by reason of competi- 
tion. That competition is brought about among the principals. That 
competition among the principals arises from one man endeavoring to 
gain an advantage over the other man, and not carrying out honestly 
the intent of the contract. So far as my experience goes, I think that 
among the manufacturers there is a strong disposition to pay to the 
laboring class all the -wages that they can afford to pay. And I think 
that the results of this committee's labors here will show it, that capital 
invested in manufacturing business to-day is not by auy means profita- 
ble. You will find that the actual value of the capital invested in manu- 
factories to-day does not yield anything like a sufficient return, not- 
withstanding the reduction in the wages of labor. If the laboring- 
classes and the capitalists had a better understanding with each other, 
each believing that the other was doing the best he could under the 
circumstances, there would be a better state of feeling on the part of 
the laboring classes. 

Mr. Sherwin. Have you any method to suggest by which that un- 
derstanding can be facilitated f 

Mr. Baxter. I think that the eight-hour law is subject to a good 
■deal of question. I think it is very questionable whether the govern- 
ment is doing the best thing it can for the laboring classes in endeavor- 
ing to make the government employes, in that sense, a favored class. 
There is the difficulty. There is no workman in the viciuity of the gov- 
ernment works who will not feel more or less jealous of a man in the 
employment of the government being able to gain the same wages for a 
day's work of eight hours as the workman outside gets for a day's work 
of teu hours. Those who passed the law had, no doubt, a good object 
in view, but that is the practical working of it. It is impossible for a 
man engaged in business who has the capital invested, and who has to 
compete with others, to carry on business under the eight-hour law, 
while his competitors work their men for ten hours. But if there was 
that hearty feeling between the employer and the employed that there 
ought to be, and as much attention paid to the consideration of the 
subject as there should be, there would be no question but that the capi- 
talist is just as much dependent on the laborer as the laborer is upon 
the capitalist ; there would be a community of feeling between the two 
classes; they would understand each other, and the old times would be 
revived when the employer used to take a personal interest in those 
who worked for him. 

The Chairman. That is what is called socialism f 

Mr. Baxter. No, sir ; I beg pardon. There is a great deal of differ- 
ence between socialism and social ieeliug. 



DEPRESSION IN LABOR AND BUSINESS. 189 

The Chairman. But this comity of relation between the employer and 
the employed approaches socialism ? 

Mr. Baxter. Yes. But it makes a striking difference whether you 
base it upon intelligence or demagogism. 

The Chairman. We are not to assume that demagogues belong to 
the class of men who handle a pick and shovel ? 

Mr. Baxter. Not by any means. Being a workman myself, I have 
great respect tor the workingman. But that is one of the difficulties 
which we have to encounter today. We have a large number of man- 
ufacturing establishments that are conducted by men who are not 
practical men. I think that a majority of the successful manufacturing 
concerns are controlled, at least to some extent, by men who have had 
some experience in managing men, and who have gained that experience 
by working and mixing with men. That is one of the essential require- 
ments of success. Men who try to manage a manufacturing business in 
an arbitrary way will never manage it successfully. But when men begin 
to understand that those who have the conduct of the business have their 
interests at heart as well as the interests which they represent, there will be 
a better feeling on both sides. The misfortune, however, is that there are 
too many people trying to make workmen believe that there is no com- 
munity of feeling between them and the employers, and that they are 
at sword*' points with one/another. That is not true. A large propor- 
tion of the manufacturing establishments in this country to day are 
simply the outgrowth of the demands of the country when almost every- 
body made money readily. The result of that state of things was that 
many men became unexpectedly possessed of wealth. They had more 
money than they needed. They wanted to add to their social position j 
they subscribed to the stock of this, that, and the other manufacturing 
concern, the business of which they knew nothing about, aud they were 
made representative men in the various companies in which they owned 
stock. The result was that their friends were put into offices, and that 
there was not the same attention paid to the fitness for their offices as 
there ought to have beeu, so that many of these establishments have 
been unsuccessful by reason of the want of management, rather than 
by reason of want of merit. 

The Chairman. You say that you have been a laboring man? 

Mr. Baxter. I have been. 1 was a machinist. 

The Chairman. In your judgment, having had ample experience, is 
eight hours' labor as much as ought to be required of a man who works 
in employment involving had labor f Is it not as much as the constitu- 
tion would endure ? 

Mr. Baxter. I worked in machine shops in the days when there was 
not as much labor saving machinery as there is now, and I do not think 
that I ever suffered badly from working ten hours a day. 

The Chairman. As a general rule, is not eight hours a day all that 
ought to be required of men who perform hard service or of men who 
are exposed to the weather ? 

Mr. Baxter. I should say not. That would be my judgment about it. 

The Chairman. You think that men's constitutions can endure more 
labor just as w 7 eli ? 

Mr. Baxter. So far as that is concerned, I think that men's constitu- 
tions will finally discover the places for which they are best fitted. I 
might be put in a condition where it would be uecessary for me to earn 
my living by endeavoring to dig, and perhaps my constitution would 
show me that I was not capable of doing that work, and that I might be 
better fitted tor something else. It does- not necessarily follow that a 



190 DEPRESSION IN LABOR AND BUSINESS. 

man who is better fitted for digging than I am would be also fitted to 
do the work for which I am adapted. 

The Chairman. As a general rule, do you not think that it would be 
best in the economy of the nation for men to work by the piece, where 
that can be done, rather than by the day or by the hour ? That system 
gives the man who is employed an opportunity to govern his own time 
according to his own ability to perform labor? 

Mr. Baxter. Iu one sense, yes ; in another, no. If I leave it to a 
man to do the job, it depends upon his own industry as to the amount of 
work he will perform in a given time. You give a man so much a day 
on account of his faithfulness, but you give a man so much by the job 
on account of his industry. 

So far as the eight hour law is concerned, if it were a general law 
throughout the country aud could be made effective, it would be an 
equal thing so far as this country is concerned. But, on the other hand, 
you must see at once that such a law would do injustice to the man who 
has his capital invested, aud who finds that under an eight-hour law he 
cannot compete with foreign manufacturers whose men work for ten 
hours or twelve hours. I do not mean to say that you shall not allow a 
man to work under the eight-hour rule if he can find a corporation who 
is willing to employ him under that rule. Corporations that are pro- 
tected by a patent or by any other monopoly may do so and not feel the 
effects of competition. But when a man is engaged in a legitimate busi- 
ness that is open to competition, the one whose men work for eight 
hours cannot compete successfully with the other whose men work for 
ten hours. I have made the distinction in our own case as to the differ- 
ence between a redaction of wages and the increased amount of labor 
performed by each person. It is im material to us when we accomplish 
our result, which is the production of a large amount of work for less 
money (which was a necessity for us in order to make our products sell). 
Now you will see that every time a reduction iu wages has been made 
(I mean in the price paid for each particular job), the value of every inch 
of that factory and of every bit of machinery is increased and the prop- 
erty is made so much the more valuable without any hardship being done 
to the men. It is one of those questions fraught with so much difficulty 
that unless a man meets it in a fair and square spirit he is liable to go 
very far astray. I do not know of any other way that it can be done 
than by men honestly endeavoring to reach a proper result, acting to 
gether and having confidence in one another. 

The Chairman. There you come back to socialism again. 

Mr. Baxter. That is not the name that I would call it by. 

Mr. Sherwin. Have you any views as to the effect of improved ma- 
chinery on the laboring classes'? 

Mr. Baxter. That is a very delicate question to handle, and it is a 
question which requires a good deal of time for one to express an intel- 
ligent opinion upon, because it is so important a question. In the first 
place you have to take into consideration that which you cannot avert, 
and in the next place you have to endeavor to remedy the difficulty. 
There is no use in a man endeavoring to deny that when a machine is 
invented which takes the place of skilled labor, the men whom it dis- 
places are obliged to seek other employments. I would like the commit- 
tee to take notice of the fact that no provision is made under this gov- 
ernment for the education of mechanics. That fact, I think, comes well 
under the jurisdiction of this committee. We have a few adjuncts to the 
agricultural colleges, but in nearly all the States these institutions have 
been absorbed by agriculture to a large extent and the mechanical depart 



DEPRESSION IN LABOR AND BUSINESS. 191 

incuts have been neglected. There may be a few exceptions to the rule, but 
as a rule there is no provision made by this government for educating 
mechauics. We have the Institute of Technology in Boston, a school 
in Troy and Worcester ; but, taking the country as a whole, we have no 
provision made for producing intelligent mechanics. In the first place, 
we have no apprentice law, which would need to be a national law. 
There is no object in my undertaking to educate a boy at my shop in 
Illinois if after a year he can run into Indiana and if I cannot bring him 
back ; so that I say we have no means by which we are able to make 
mechanics. There is no inducement for an employer to try to educate a 
boy. Aud on the other hand there may be an employer who will take 
a boy as an apprentice and who will work him at what may prove to be 
profitable to the employer but not to the boy. It is simply when a boy 
has a genius of his own that he makes an advance in mechanical pur- 
suits. It is not by the aid of the employer. Now, in regard to labor- 
saving machines ; their beneficial effect is open to question. One man 
may say that their introduction has not a good effect because it displaces 
skilled labor. Now, what is going to be the result ? I do not know any 
other result than for every man to endeavor to be himself the man who 
will produce the machine, and for every man to endeavor to be thrifty 
and industrious so as to be able to avail himself of such advantages as 
are presented to that class of men. A man will make more money in 
the end by endeavoring to improve himself than he will make by going 
around endeavoring to make people believe that no one ought to be 
asked to work for more than eight hours. 

Mr. Sherwin. Have you any idea to suggest as to the mauner of 
making mechanics? 

Mr. Baxter. I should be glad to see the general government have 
carried out in good faith what was originally intended in the agricul- 
tural colleges laws. I understand that the grant made by Congress was 
originally intended to be for the benefit of agriculture, and of the me- 
chanical arts. If the theory advanced by agriculture is true, that the 
agricultural colleges should be placed where the.v are surrounded by 
farms, then it must be equally true that the mechanical colleges should 
be placed where they are surrounded by workshops. 

The Chairman. I suppose it would be impossible to gather half the 
crops ot this country without the use of the mower and reaper. 

Mr. Baxter. Undoubtedly that is true; but if we had not the 
mower and reaper we would require to have more people working on 
the farms. 

Mr. Cowgill. If we had not the mower and reaper we would not 
plaut so much. 

Mr. Baxter. No; because it would not pay us to do so. Now we 
are able to feed the world with our surplus product of grain. I come 
right back to this, that if there was a more intelligent understanding 
between the employer and the employed we would get rid of a great 
many of those difficulties, and would frown down dishonorable business 
men. I believe that that is the idea which covers more ground than 
any other. 

Mr. Sherwin. A good deal of the evidence given here has gone upon 
the hypothesis that there is almost a deadly antagonism between capi- 
tal and labor. 

Mr. Baxter. So there is. 

Mr. Sherwin. Au inherent one. Now, if you can suggest some 
method by which that understanding can be arrived at we shall be 
happy to hear you. 



/ 



192 DEGRESSION IN LABOR AND BUSINESS. 

Mr. Baxter. I have nothing further to say. 

Views of Mr. A. R. Parsons. 

Mr. A. R. Parsons came before the committee as a volunteer wit- 
ness. He stated, in reply to preliminary questions, that he is a resi- 
dent of Chicago; has lived here six years, and is a printer by trade. 

The Chairman. What branch of industry do yon represent before 
the committee"? 

Mr. Parsons. I am an active member of nearly every industrial or 
trade organization in this city. 

The Chairman. Assuming it to be a fact that there is a great de- 
pression in the industries and labor of the country, what, in your judg- 
ment, has been the cause of it, and what is the remedy for it ? 

Mr. Parsons. I have an idea as to what has produced our immediate 
depression. Panics are of usual periodical occurrence every ten years, 
and the panic of 1873 was only postponed in consequeuce of the war. 
Just about the time that the war broke out in this country we were on 
the eve of a commercial panic, but the war interrupted the natural 
progress of commerce, and at once there was a demand for a million and 
a half of men to become soldiers. 

This demand was made by the Government of the United States, and 
the government undertook to feed and clothe this vast army of men. 
In order to do that the government had to become employer, and to fur- 
nish itself with capital. It did so by means of greenbacks. The vacu- 
um created by the withdrawal of a million and a half of men from the 
industrial field created a demand for labor among those who were left, 
and consequently an increase in the rate of wages took place. The 
value of labor was increased. This went on, and wages continued to go 
up until the war closed. The working classes improved their condition 
in many respects. Many of them not only increased their wages, but 
also reduced their working time. At the end of the war, when the men 
who were not killed <*r destroyed by disease returned home, fully a mil- 
lion of them at once, they were poor. They began by degrees to com- 
pete for the opportunity to work with those who had remained at home. 

This competition at first was very gradual. But by degrees, as the 
necessities of the men became greater, the competition became more 
intense, and the result was that work could only be procured by the un- 
employed on condition that they would do it at a cheaper rate than it 
was then, being done. This brought on strikes; it brought on conflict 
between capital and labor. Of course when a reduction of wages took 
place amounting to 10 per ceut., there was a reduction of expenses 
amounting to 10 per cent., and there was a reduction of consumption 
equal to 10 per cent. Of course if there is less consumed there should 
be less produced. Business began to feel this reduction of consump- 
tion, and we began to hear of bankruptcy. Men were unable to keep 
up their enterprises in speculations. The hopes of the Northern Pacific 
Railroad Company were not realized ; business was on the downward 
grade; wages were decreasing, and the volume of business was being 
contracted ; the people were buying and were consuming less. And the 
result was the failure of Jay Cooke's bank. That one great fact started 
the ball rolling, aud produced the financial panic of 1873. Everybody 
knows the rest. It is unnecessary to go over it. The same story has 
been repeated throughout from that time to this. 

The Chairman. You mean that things from that period have been, 
glowing worse ? 



DEPRESSION IN LABOR AND BUSINESS. 193 

Mr. Paksons. They have been growing worse continually until wages 
have got to a point in this country where (as Mr. Hewitt informed Pro- 
fessor Sumner), in regard to those articles that we manufacture in com- 
mon with other countries, the labor engaged in their manufacture is ob- 
tained at a less cost here than in the Countries with which we have to 
compete. When that took place, and it took place two years ago in 
this country, we began to ship cotton cloth to England, and many other 
products that we are selling in foreign countries. This country began 
to take a little trade from abroad. The balance of trade (as commercial 
men call it), was in favor of the United States. The result is that we 
see strikes through England, Germany, and Belgium, and the merchants 
and manufacturers of those countries are forcing down wages in order 
to recover their lost trade, which has been captured by the low-paid 
labor of the United States. This thing is going on as the last witness, 
Mr. Baxter, has stated. He stated the fact, as a commercial man, that 
competition regulates wages, or rather that it is an element in the reg- 
ulation of wages ; at any rate that it regulates the hours of labor. Of 
course the standard of living which a workingman thinks he must 
have (including the kiud of clothes that his children must wear, and 
the kind of society that his family must miugle with, and consequently 
what kind of a house he must live in), has something to do with the reg- 
ulation of wages, so far as the workingman is concerned. I would like 
to call the attention of the committee to some statements made by Mr. 
Baxter. He represents the side of the employing classes, and he rep- 
resents it very ably and fairly too. He states that business is prosper- 
ous in the Elgin watch factory, but that prices are low. I think it is 
fair to state that the operations of trade in the Elgin watch factory 
are simply a sample of the whole machinery of industry, and the same 
things that you see in operation there, aside from some small indifferent 
local matters, you would witness throughout the whole industrial sys- 
tem. You would see the same causes and the same effects. Business 
is prosperous but prices are low. That is certainly a strange statement 
coming from a manufacturer. How can business be prosperous if prices 
are low ! Does not the prosperity of business depend upon the prices 
derived from it 1 I understand him to mean by that that the business 
is increased beyond what it was four years ago, and that its prosperity 
consists in that fact. He states, however, that they had to reduce wages 
in order to sell goods. Before the panic they were able to sell their 
goods. Wages were high and business was not depressed. How do 
you reconcile this ? When wages were high he could sell his goods ; 
but now he finds that he cannot sell his goods aud that he must reduce 
wages. That is argument made by manufacturers generally. 

The Chairman. He. sells his goods at a profit, but their prices are 
reduced. 

Mr. Parsons. He stated that he had to reduce wages, in order to 
sell his goods. If that is true, then, when times were good and wages 
are high, he has no such cause. He states that the wages of his em- 
ployes have been reduced practically teu per cent., but he fails to state 
to the committee that four years -ago his men worked ouly eight hours 
a day, aud that they now work ten. And he claims that in consequence 
of their working two hours a day more they get a little more pay. The 
wages are practically reduced about ten per cent. I am so informed by 
those in his employment. The difference between eight hours aud ten 
hours is very important. As a manufacturer, he ignores those two hours 
extra labor which he practically gets for nothing. He gets two hours 
more in the day every day for nothing out of some 850 working men and 
H. Mis. 5 13 



194 DEPRESSION IN LABOR AND BUSINESS. 

women. ;Now if you multiply 850 by two hours a day, you will find 
that that labor amounts to a considerable sum of money. 

The Chairman. He says that his men are generally working by the 
piece. 

Mr. Parsons. But he stated also that it made no difference whether 
they worked by the piece or by the day — that competition and the de- 
mand for labor regulate the price of labor. But notwithstanding the 
fact that the employes in the Elgin watch factory work ten hours a 
day now, where they formerly worked only eight, they get ten per 
cent, less wages. Foreign competition, he says, forced them to reduce 
their wages, and he claims that by means of this reduction of wages, 
the American watch manufacturers have captured the market in this 
country and have driven out foreign competitors. As a workingman 
I want to state that that has been done at the expense of the working 
classes — at the reduction of their life standard. They have had to move 
from six-room house to tour-room houses; they have had less to eat, less 
to wear, and less of the comforts of life in order that the domestic man- 
ufacturer might drive out by cheap labor manufactured goods of foreign 
countries. Mr Baxter was asked as to the question of reducing the 
hours of labor. He says that the eight-hour system is not feasible; 
that if we adopt such a law it cannot be enforced, and that the working- 
men themselves do not want it. I guess that workingmen ought to be 
allowed to speak for themselves in that matter, and to say whether they 
want it or not. How can he say that the workingmen do not want 
their hours of labor reduced to eight, when on the one hundred and 
third anniversary of this American Republic (the last Fourth of July), 
the wage workers of this country, met in nearly every large city in the 
United States and proclaimed their demand for a reduction of the 
hours of labor to eight ? How can he say so, when a reduction of the 
hours of labor is demanded by a greater portion of the trades-unions in 
the United States — the organized wage-workers of this country? and 
yet we are informed this morning, by a representative of the manufac- 
turing class, that the workmen do not want a reduction of the hours of 
labor? 

Mr. Cowg-ill. Do you mean that the laborer shall be paid the same 
price for eight hours' work as he should receive for ten hours' work, or 
do you mean something else? 

Mr. Parsons. If you have no objections I will answer that question 
as soon as I get through my discussion as to the feasibility of the law. 
We do not claim that the United States Congress can pass a law redu- 
cing the hours of labor to eight, and can enforce it. We do not claim 
that in regard to private industry and manufacturing interests. There- 
fore, when Mr. Baxter says that it is not feasible, he is talking about 
something which workingmen do not demand, and he is simply trying 
to place us in a ridiculous attitude, as demanding something that is non- 
sensical. But we do claim that the United States Government can 
pass an eight-hour law, so far as its own jurisdiction is concerned, and 
to make it extend to all contracts, and all patents issued by it, and to 
all corporations chartered by it or having special privileges from it. 
We claim that Congress (and I do not suppose that any member of the 
committee will deny it) can pass a law regulating the hours of labor, in 
all institutions and industries over which the United States Govern- 
ment has any control, either directly or indirectly. 

Mr. Cowgill. You mean that where the United States Government 
is one of the contracting parties it may make a bargain of the sort % 

Mr. Parsons. Yes. 



DEPRESSION IN LABOR AND BUSINESS. 195 

Mr. Cowg-ill. You do not mean to extend it beyond that, I presume? 

Mr. Parsons. Not so far as the United States Government is con- 
cerned. 

Mr. CowGriLL. Do you mean to say that any government could extend 
it beyond that • 

Mr. Parsons. The State government, of course, can do it with refer- 
ence to the matter what the United States Government cannot do in 
cases where the State is the contractor. 

Mr. Cowg-ill. Do I understand you to argue that the State can make 
a law that I shall not labor ten hours a day for my employer if I think 
proper to do so, or that my employer must refuse to make a bargain 
with me for eight hours a day labor ? 

Mr. Parsons. I do not mean to say that. 

Mr. Cowoill. In other words, can the State control private contracts 
between individuals ? 

Mr. Parsons. It cannot under the Constitution as it exists. If you 
were to ask me the direct question what the State can do, I tell you 
that the State can do everything and anything. 

The Chairman. Through its constitution ? 

Mr. Parsons. It can change or abolish its constitution, and can set 
up a monarchy or a republic when it gets ready to do so. With regard 
to the feasibility of this law, Congress has the power, under the Con- 
stitution, to pass it. We ask it ; we demand it, and we intend to have 
it. If the present Congress will not give it to us we will send men to 
Congress who will give it to us. What we want is, not to establish an 
aristocracy of labor, as was intimated by Mr. Baxter, who said that it 
would be unfair to give a special class the benefit of short hours. This 
manufacturer admitted in that remark that it was a benefit to have short 
hours of labor, and that the men who have them would be a privileged 
class of employes. We know that so far as legislation is concerned Con- 
gress is the fountain-head, the highest authority, and we went to work 
to get Congress to pass an eight-hour law, kuowiug that the example 
would be followed by States and by municipalities, and will become a 
custom of society. Eight hours' labor will, through that process, con- 
stitute a day's work, and will become, not, perhaps, a statutory law, but 
the common law of the community, just as ten hours' labor now is the 

common law. Ten hours' labor is the , not under any statutory 

enactment, but because it is the custom of society. 

You see that an eight-hour law is feasible so far as Congress has juris- 
diction, and I have stated to you some of the reasons why we want the 
hours of labor reduced. Mr. Baxter states that he does not believe that 
ten hours' work is injurious to the working classes, either mentally, 
physically, morally, or pecuniarily. Right here is where the working 
classes take issue with the manufacturers. Aside from any questions 
of capital or labor, we, as working people, know that it is morally, 
physically, intellectually, and pecuniarily injurious to us as a class to 
work for more than eight hours a day the year round. Hours of labor 
represent all that there is in the artificial wealth of the world. Of course 
land is wealth, but it has a sham value because it is not the result of 
labor. Land is not created by labor, but by nature. All visible wealth, 
however, all created wealth, is the result of labor and represents precisely 
so many hours' labor. Therefore, in this labor question, the fight is nar- 
rowed down (because it is a fight) as to which class is going to get the 
benefit of these hours of labor— the employer or the employed. The 
eight-hour league, and the trades unions, and the other organizations of 
the country that are makiug this demand do not propose thereby to 



196 DEPRESSION IN LABOR AND BUSINESS. 

paralyze industry. They do not propose to bring an industrial confusion 
or a state of anarchy, or to precipitate revolution in this country. We 
are peaceable citizens, husbands, fathers. We are citizens of the State 
and law-abiding men. When we are charged with being incendiaries, 
when we are charged with being conspirators, violators of the law and 
incited to rebellion, it only needs to see from whom these charges ema- 
nate in order to be able to get a fair idea as to how much weight should 
be attached to them. Charges of this character are merely an effort on 
the part of those who are trying to prevent us from improving our con- 
dition. The working classes simply seek to improve their condition. 
This is a natural feeling, and I cannot say that there is anything unneces- 
sarily seditious or criminal in such a desire. We simply want less work 
and more pay, knowiug that only through short hours and high wages 
can our condition be improved. We know this, and hence we struggle 
for it. We wish to get at it by degrees. We wish to affiliate whatever 
is good in society by the process of attraction, and the first thing that 
we demand is a measure that will diminish the immediate power of 
wealth, and will remove the worst forms of poverty. The immediate 
power of wealth consists in this power to enforce men to submit to the 
terms dictated by wealth, out of which men will perform a day's labor. 
That is the immediate power of wealth. This is an evil which should be 
removed, and we want to remove the worst disability of poverty by re- 
ducing the hours of labor; by the distributing of work that is to be done 
more equally among the workingtnen, and consequently reducing the 
competition among the workingmen themselves for the opportunity to 
work. By making labor scarce we will increase its value, because wher- 
ever there is a scarcity of an article in the market (and labor is the chief 
necessary of life) in proportion to its scarcity the demand will increase 
and the price will increase with the demand. I believe that that will 
be the result, first of the action of Congress and then of the action of the 
States. But not until the working people of the United States, through 
their trades and labor unions, meet in national conclave or in labor con- 
gress and there decide that the hours of labor must be regulated, will it 
be done. Not until then will it be done and become an absolute custom 
of society. I think that the laboring men of this country — the organ- 
ized working people of the country — should consider this matter as soon 
as possible. 

Mr. Cowg-ill. I object to the statement of the witness, because if 
the remedy for the depression of labor can only be obtained through 
the means he speaks of, it is not likely to be obtained through Congress. 
To use his own words, it will not be obtained through Congress, and 
therefore we have nothing whatever to do with it. 

The Chairman. We have the right to take the statement of the wit- 
ness as to the propriety of an eight hour law. (To the witness.) What 
else have you to say on the subject I 

Mr. Parsons. I wish to offer to the committee a set of resolutions 
emanating from the eight-hour league, embodying the sentiment of the 
trades unions of the United States, which are demanding the reduction 
of the day's labor to eight hours. I wish to submit these resolutions 
as setting forth the views of that class of men : 

Besolved, That the first great event which ever occurred in the progress of industry, 
was a division of labor ; tnat the progress which divides human labor is the fact that 
distinguishes the most of mankind from savages ; that in a division of labor, the ex- 
penditures of one laborer furnish employment or days' works for other laborers ; that 
days' works or employment can be increased by increasing expenditures ; that the ex- 
penditures or outgoes of tie laborer can only be increased by increasing his wages or 
come ; that employment for the unemployed can only ccrne from the larger incomes 



DEPRESSION IN LABOR AND BUSINESS. 197 

and outgoes of those who are employed ; and that the only way by which the income 
of wage-laborers can ever be permanently increased, without reducing its purchasing 
power or increasing the cost of production, is through a reduction of the hours of daily 
labor. 

Resolved, That American prosperity never cau develop into healthy and permanent 
conditions by increasing exports or decreasing imports ; that if foreign productions 
pay for the larger exports, instead of foreign money, such payment must either be dis- 
tributed to actual consumers, many of whom may be laborers, or be exported. But if 
larger exports are paid for in foreign money instead of foreign goods, such payments 
are far more likely to enrich American capitalists than to increase the comforts of 
American laborers. 

Resolved, That the extraordinary increase of American exports within two or three 
years should be regarded with profound mortification, because they are the disgrace- 
ful result of the decreased earnings and increased poverty necessary for American 
laborers to undersell, discharge, and make paupers of European laborers. And the 
lower wages at home, necessary to capture foreign employments, are the lower wages 
necessary to destroy home employments. 

Resolved. That the congratulations unblushingly indulged by American statesman- 
ship over our increasing exports are sufficient evidence that it fails to comprehend 
the almost infinite difference between capturing the world's employments through 
competition, and creating new employments through a higher civilization. 

Resolved, That within the last quarter of a century so few new occupations, com- 
paratively, have been created, and so many old occupations have been destroyed by 
improved methods of production, that the discharged laborers of Europe and the 
United States cannot now obtain sufficient employment from the trade and commerce of 
all the outside world; especially when to the idleness now existing is added the idle- 
ness that ought to exist, if all the non-productive and destructive avocations were 
blotted out of existence, and those who follow them were also discharged. 

Resolved, That to laborers not enslaved by positive law, the most deadly thing that 
can ever occur is enforced idleness ; that idle hands are at the root of all bankruptcy 
and financial ruin ; and that whether idleness increases or decreases is the most im- 
portant knowledge industrial statistics can now reveal. Because the increase or de- 
crease of idle men decides whether a financial storm is coming or going: therefore, 

Resolved, That hand in hand for the great movement of eight hours must be a 
weekly or a frequent census and report of the world's unemployed; that eight hours 
or less hours will create days' works ; and how many days' works must be created 
will be revealed when the statistics of idleness are sufficiently thorough and extended 
to cover the whole civilized wdrld. 

Resolved, That these two measures are not American or English or German or 
French, but they belong to the political economy which begins with the idea that 
" Our country is the world, and our countrymen are all mankind." And for their 
final vindication we confidently appeal to the better educated public opinion of the 
civilized world. 

I have also here a statement taken from the report made to the Mich- 
igan legislature of 1878 by the Michigan State board of charitable and 
penal institutions. It is as follows : 

There is a prevalent opinion that tramps, all of them, while professedly seeking 
work, are really endeavoring to escape it. This may be true as a general rule, and 
doubtless is, of the predatory class, but it is subject to so many exceptions on the whole 
that the charitably disposed cannot safely adopt it without consideration in each 
case. Instance this : 

The house of correction in Detroit is a penitentiary ; in fact, in some respects, a State 
prison. ■ Its discipline is as severe, and its labor harder, and its fare no better than the 
prisoners get at Jackson. It has a milder name, that is all. About four hundred 
tramps annually voluntarily plead guilty to vagrancy, and get themselves committed 
to prison for terms of thirty, sixty, and ninety days to this prison. They thus vol- 
untarily put themselves to hard labor, the same as that to which they would be sen- 
tenced if guilty of grave offenses. Their only object is food and shelter, which they 
have failed to find outside. The majority of these could find admittance to the alms- 
house at Wayne, where they would be comfortably supported during the winter with- 
out labor, but they prefer labor to idleness. These constitute four huudred exceptions, 
in one city, to the general rule above referred to, and serves to commend the whole 
subject to thoughtful consideration. A large portion of the four hundred persons have 
been guilty of little more than improvidence, often accompanied by intemperance, 
exhausting the summer's saving before midwinter. Others are even iumcent of these 
faults, and the scanty income that has barely served at best of times has, for some rea- 
son, failed entirely. Whatever the fault or misfortune, it is evident that aversion to 
work does not characterize them. 



198 DEPRESSION IN LABOR AND BUSINESS. 

I have also a statement which I was requested to hand to the com- 
mittee in reply to a statement made a few days ago by Mr. Gage, and 
Mr. Randolph, secretary of the board of trade, in regard to the price of 
labor paid by the city. 

The Chairman. State what the price of labor paid by the city is. 

Mr. Parsons. I put myself to the trouble to find out. When I heard 
Mr. Gage's and Mr. Randolph's statements I did not believe that they 
were correct, and sent to the foreman of the first gang of men whom I 
met working on the streets, and asked them what wages they were get- 
ting. I told him that a statement had been made before this committee 
that they were getting $1.50 a day. He said that that was not so, that 
the men were getting but a dollar a day, and that that dollar a day was 
paid in scrip. 

The Chairman. Payable when % 

Some persons in the room. Never. 

Mr. Parsons. That scrip is sold by the men for 95 cents on the dol- 
lar. The city of Chicago owes two months' wages to day to its laboring 
men. I have here a communication from one of the city laborers, which 
I will read to the committee. 

The communication was read as follows : 

Chicago, July 29, 1879. 
To the Congressional committee now in session at Chicago: 

I notice a statement made before your committee on yesterday by some members of 
the board of trade and some bankers of this city that the city paid its laborers $1.50 
per day. I desire to state to you that this is not true, as the city only pays its labor- 
ers $1 per day, and not in cash, but in scrip, which we are obliged to sell to these 
same bankers when we get it, for ninety-five cents. The city now owes all its street 
laborers for two months' wages. 
Very respectfully, 

WILLIAM AHERN, 

A City Laborer. 

Mr. Sherwin. You say that the effect of an eight-hour law would be 
to raise wages'? 

Mr. Parsons. It would increase wages. 

Mr. Sherwin. Then would it not increase the prices of all articles 
produced. 

Mr. Parsons. Not necessarily. 

Mr. Sherwin. Do not wages enter into the prices of all products? 

Mr. Parsons. If the hours of labor were universal the advance in 
the price of commodities would be very slight. 

Mr. Sherwin. If it was so all through the United States it would 
raise the prices of all commodities. 

Mr. Parsons. Yery slightly. Perhaps there might be a five per 
cent, advance in the prices of all commodities, and twenty-five per cent, 
advance in the price of wages. 

Mr. Sherwin. How do you form that opinion ? 

Mr. Parsons. That has been the result of a reduction of the hours 
of labor in the past. 

Mr. Sherwin. Is there not always a known ratio between an advance 
of wages and an advance in the prices of commodities % Has not an 
increase of wages always had the effect of increasing the prices % 

Mr. Parsons. Slightly. 

Mr. Sherwin. Supposing that a reduction in the hours of labor 
should increase wages, then the rise in the price of labor would raise the 
price of all commodities, and what would be the gain to the laborer? 

Mr. Parsons. You assume that I deny it. 

Mr. Sherwin. Y^ou say that you admit it to a certain extent. 



DEPRESSION IN LABOR AND BUSINESS. 199 

Mr. Parsons. To a certain extent, but only to a very slight extent. 
The workingman would become possessed .of two hours more time. 
He would wiu these two hours for himself. He would be two hours 
nearer to his freedom. And these two hours would enable him to 
make coutracts, and to have some voice in the regulation of contracts. 

Mr. Sherwin. What do you mean by that : do you mean that ? 

Mr. Parsons. I mean this: under our system of labor there is no 
such thiug as freedom of contract. 

Mr. Sherwin. What do you call freedom of contract ? 

Mr. Parsons. Freedom of contract is where the parties stand on an 
equality, and where either party is free to accept or reject the offer. 

Mr. Sherwin. That is, that a reduction of the hours of labor would 
increase the demand for labor, and that a man would be on a better 
footing to make his bargain with the contractor. 

Mr. Parsons. A reduction of the hours of labor would give employ- 
ment to more men by reducing competition among them for the oppor- 
tunity to work, and would enable them to make better terms with their 
employers. 

Mr. Sherwin. Is there not a constant increase of laborers, and a 
constant pressure of men in the market; and if you reduce the number 
of hours for a day's work to eight, will the time not arrive when the 
same pressure will be felt that is felt now ? 

Mr. Parsons. O, certainly, because high wages always produce in- 
ventions in machinery. In China, where the wages are only six cents a 
day, they have no machines, but where wages are high machinery is 
always introduced. 

Mr. Sherwin. Then the eight-hour law would be only one step in a 
progressive series of reductions of the hours of labor? 

Mr. Parsons. The eight-hour law is simply beginning a real solution 
of the labor question ; the regulation of the hours of labor to that 
point where all will be employed. When that point is reached men will 
always stand on an equality with reference to the power to contract. 

Mr. Sherwin. Supposing that that was accomplished to-day, and 
that all men were employed 'under the eight-hour system. Time goes 
on, business increases, and population increases. How long do you 
think that state of things would continue 1 

Mr. Parsons. Of course it is mere guess-work. I believe that if the 
eight-hour system were universal in the United States today we would 
be workiug under a six-hour system within the next five or ten years. 

Mr. Sherwin. Where would this reduction of the hours of labor 
stop ? 

Mr. Parsons. This reduction of the hours of labor would stop when 
the ingenuity of man will be no longer able to supply his wants by 
machinery to which the motive power of steam and electricity can be 
applied. 

Mr. Sherwin. And the time may come when no manual labor will be 
required. 

Mr. Parsons. I believe that about four hours labor a day is neces- 
sary for health, for exercise. 

Mr. Sherwin. But supposing that the supply of la»bor was such that 
the men could not even work four hours a day ? 

Mr. Parsons. Then they could go to the gymnasiums and take exer- 
cise. 

Mr. Sherwin. Suppose that this would ultimate in a commune; 
would it not ? 

Mr. Parsons. Xo, sir. It would ultimate in co-operation, and that 



200 DEPRESSION IN LABOR AND BUSINESS. 

would be the natural logical result, the natural outcome. Through this 
process wages would be increased until the profits of labor would be 
melted out of existence, and the competitive system which we now 
have in labor would be naturally melted into the co-operative system. 
That would follow as the natural logical result. But this involves of 
course the building up of an entirely different class and race of people. 

Mr. Sherwin. What do you mean by a different race of people ? 

Mr. Parsons. I mean that men would have to be far more elevated 
in intelligence and morality to be fitted for the co-operative state. 

Mr. Cowgill. Then you mean to have it after the millennium. 

Mr. Parsons. That will be the labor millenninm. 

Mr. Sherwin. You say that in five or ten years the hours of labor 
would be reduced from eight to six. How would that be brought 
about ? 

Mr. Parsons. It would come from the competitive system. 

Mr. Sherwin. From an increase in the supply of labor? 

Mr. Parsons. No; but from the invention of machinery. 

Mr. Sherwin. Then an increase of labor saving machinery would be 
an element in the problem ? 

Mr. Parsons. Certainly, machinery is labor. 

Mr. Sherwin. An increase in the supply of labor would be constantly 
pressing ? 

Mr. Parsons. Yes. There is no danger of over-population in this 
country. 1 believe that one of the things that Congress should do to 
relieve labor in the United States is the passage of what is known as 
the Wright's supplementary homestead bill. This measure, in my opin- 
ion, would be largely beneficial, and would be a great blessing to many 
thousand people in the United States. A great number of people in 
this city, I am sure, would avail themselves of its advantages. It would 
be a benefit to those who went, and a benefit to those who remained. 

Mr. Sherwin. Do you think it is a good and safe principle of gov- 
ernment, for the government to interfere by aiding men directly with 
money ? 

Mr. Parsons. I think that if the government aids the people by 
loaning money to them, the people are simply borrowing money from 
themselves. It is their own money, and surely they have a right to do 
what they please with their own. 

Mr. Sherwin. Then if that were so, the man who paid the largest 
tax would have the right to the largest loan. 

Mr. Parsons. Y"es, if this was a government of the wealthy classes, 
but it is a government of the people. 

Mr. Sherwin. You say that the money of the government is the 
money of the people, and that they have a right to loan it to them- 
selves. Now, a wealthy man is one of the people, and as he pays more 
taxes than a poor man he would have a right to a larger accommo- 
dation from the government on the same principle. 

Mr. Parsons. I deny that proposition. It is only the laboring classes 
who pay taxes. The wealthy are siinpty the collectors of the taxes. 
A national bureau of national statistics is of evident importance, 
because if we had such a bureau this great question would be no longer 
a matter of guess- work, but a science. 

Views of Dr. W. J. W. W. Washington. 

Dr. W. J. W. W. Washington came before the committee as a volun- 
teer witness. He stated in reply to preliminary questions that he is a 



DEPRESSION IN LABOR AND BUSINESS. 201 

physician and surgeon; that he has lived thirteen years in the State of 
Illinois ; that he was born in Springfield, Mass., and came here from 
Massachusetts; and that he proposes to speak in behalf of men of his 
own race (colored). He believed that the hard pressure of the times 
originated with the war, and he also believed that Congress had failed 
to look after the interests of laboring people, and of the people in gen- 
eral. When the war closed there should not have been any more bonds 
issued, and he thought that the issuing of such bonds originated the 
present hard times. He thought that when the war was over Congress 
should have declared all sorts of money, whether gold, silver, or paper, 
a legal tender. The paper money had intrinsic value as much as gold. 
Neither gold nor silver could be money without the stamp of the govern- 
ment. As to the national banks, he thought that they should never 
have been allowed to issue bills; and he alsobelieved that a savings bank 
system should be provided by the government. The laboring men of 
the country wanted cheap money and high wages. He declared himself 
a member of the Greenback party. He thought that another thing 
which had its effect in producing hard times was the exodus of negroes 
from the South to the Xorth, aud that bad legislation in the South had 
caused such exodus. 
The committee here took a recess to three o'clock p. m. 

AFTER RECESS. 

Views of Mr. Carl Beer. 

Mr. Carl Beer came before the committee at its invitation. He 
said in reply to preliminary questions that he resides in Chicago; that 
he has lived here for fifty years ; and that the business of his firm is 
the importing of fancy goods, toys, &c, 

Mr. Sherwin. Please state to the committee your views on the ques- 
tion before it. 

Mr. Beer. I think the depression of trade generally is not merely of 
a national character, but that it is a calamity of national significance. 
The same stagnation that we have had in this country has been pre- 
vailing all over Europe, and the same state of things exist there still. 
I venture to say, from what I have seen recently when I was in the old 
country, that it is worse there than it is here. The attempt to abolish or 
abate anything in the way of what is called the great struggle between 
capital and labor, and to do so by means of legislation, seems to be 
futile. In the old country the socialistic movement has certainly some 
reason for its existence. There there is a reason for it, but it appears 
to me that in transplanting it to this country, where there is actually no 
reason for it, they are trying to find grounds for their action and move- 
ment. Their claims for inaugurating the socialistic movement here are, 
it appears to me, without any reason. Only to a certain extent, it seems 
to me, are they right in attempting to carry out certain principles. 
Where they want to do away with monopoly, and with a tendency to 
centralization (which seems to be the tendency of the age) I think they 
just hit it. They are right on that point. But I am inclined to doubt 
that any remedy can be found in the way of legislation. These two 
things, centralization and monopoly, seem to be the tendency of the age. 
On the other hand, there is a great commercial and financial tendency 
to amass fortunes and to'accumulate money, and, on the other hand, 
there is a leveling influence on the great masses of the people. Whether 



202 DEPRESSION IN LABOR AND BUSINESS. 

it is possible to bring about a better state of things than exists between 
these two conflicting elements I do not know. 

Mr. Sherwin. What is the state of business here now ? 

Mr. Beer. I think that we are over the worst times now. I think 
that we are about at the end of these seven meager years, and that a 
different state of things will follow. 

Mr. Sherwin. On what do you base your opinion % 

Mr. Beer. On the natural course of thiugs — on the principle that 
after a certain action a certain reaction will follow. 

Mr. Sherwin. You can see that the reaction has begun here ? 

Mr. Beer. Yes, I think that things are getting better now in com- 
mercial circles as well as in labor. 

Mr. Sherwin. Is there any trouble in the financial world now % Is 
there any lack of money for the proper transactions of business % 

Mr. Beer. I do not think there is any lack of money. I think what 
is generally termed a lack of money is an inaccurate definition of the 
matter. A great many people are inclined to mix up the idea of capital 
and money, while there is of course a vast difference between them. 
What the merchants want is capital. They do not need money, but 
capital. 

Mr. Sherwin. Have you observed the condition of the laboring peo- 
ple here at the present time % 

Mr. Beer. Not sufficiently to form a very correct opinion on the sub- 
ject. 

Mr. Sherwin. Can you form an opinion as to the number of men out 
of employment now, compared with the number in prior times $ 

Mr. Beer. From what I understand from a great many sources the 
laboring men are paid better now, and there is plenty of work for all of 
them. That is what I have heard, although I am not sufficiently ac- 
quainted with the condition of things to form a very correct opinion on 
the subject. 

Mr. Sherwin. Do you know how wages are now, compared with 
former years ? 

Mr. Beer. From what I have heard from persons employing men, 
wages are much better than they used to be in factories, and in different 
manufacturing establishments. I understood from one person in the 
city, who is in the manufacturing jewelry trade, that his forge workman 
gets about double the wages now that he used to receive when he was 
employed in New York twenty or twenty-five years ago. At the same 
time we have been figuring on the subject, and he says that at that 
time workmen had to pay at least as much if not more than they now 
pay for the commodities of life. 

Mr. Sherwin. What is your observation in regard to business gen- 
erally in this city, as to the feeling of confidence or otherwise ? 

Mr. Beer. Business generally is done now on a much safer basis, 
but at the same time at a smaller rate of profit than in former years. 

Mr. Sherwin. How does the volume of sales compare now with that 
of former years? 

Mr. Beer. The amount of sales remains about the same, excepting, 
perhaps, for one or two years at the time of the greatest inflation. One 
of the elements affecting trade now is the monopoly by certain houses, 
and the centralization of business. 

Mr. Sherwin. Can you ascribe that to any cause % 

Mr. Beer. I can only see in it the natural result of our present mode of 
living, and of our rapid communications. I should say that it is the re- 
sult of the era of railroads, just as the late panic was due to the same 



DEPRESSION IN LABOR AND BUSINESS. 203 

causes. The fact tbat that panic extended all over the world, that it 
was felt in Europe and even in Asia, seems to furnish some evidence to 
that effect. 

Mr. Cowgill. How do the wages which the laboring classes are able 
to obtain for their labor at this time compare with the wages which they 
were able to obtain immediately previous to the panic of 1873, in pro- 
curing the necessaries of life for those classes — in paying for clothing 
and subsistence and rents, and everything that goes to make up the nec- 
essaries and comforts of life ? Can the laboring classes procure as much 
of those comforts and necessaries of life as they were able to obtain at 
any other time from their labor ? 

Mr. Beer. We were in a somewhat different position in Chicago at 
the time the panic broke out from that which other cities were in, be- 
cause in 1872 everything here was bustle and life. This was at that 
time the biggest money-making city in the world, because at that time 
all the insurance money was being spent here. So,5if you want to get 
at general conclusions, Chicago would not be the proper city to deter- 
mine the question. 

Mr. Cowgill. You speak of insurance money being expended here at 
that time ; do you mean that at that time the citizens were borrowing 
large sums of money from insurance companies for the purpose of mak- 
ing investments here ? 

Mr. Beer. No ; 1 had reference to the amount of insurance money 
paid for the losses after the fire. The payment of those losses necessa- 
rily put a good deal of money in circulation here, and (what was of the 
greatest importance) money circulated very quickly. 

Mr. Cowgill. Go back to a time prior to the great fire. What are 
the facts then as to wages, taking into consideration the value of the 
money which we were using at that time and its value today, and the 
prices of such thiugs as constitute the comforts and necessaries of the 
laboring classes ? Could the laboring man procure as much or more for 
his wages at that time than he can to-day ? 

Mr. Beer. I think that at that time everything in the way of the 
commodities of life could be procured at the same rate as now, except 
in this city rents, for instance, aud except probably some other items 
of every-day life. These went lower here corresponding with the de- 
cline of gold. They are lower now than then. 

Mr. Cowgill. Is it not a fact that, with very few exceptions, a dollar 
will buy as much of the necessaries of life to-day as it would buy from 
18G5 to the time when you had your fire here ? 

Mr. Beer. Yes, indeed, and more, too. 

Mr. Cowgill. How much more would a dollar buy now than it would 
buy then — one-half more ? 

Mr. Beer. That I doubt ; I should say about 20 to 25 per cent, more 
on the average — not referring to one article, but to the whole average. 

The Chairman. In what branch of busiuess are you engaged ? 

Mr. Beer. Our firm is dealing in fancy goods and toys — mostly goods 
which we import from Europe. Our firm is situated on State street. 

The Chairman. Are you large dealers ? 

Mr. Beer. We are selling about $150,000 worth of goods a year. We 
sold more than that in one year. 

The Chairman. How many persons have you employed in your es- 
tablishment ? 

Mr. Beer. At this time of the year we have about twenty. We have 
more in the fall. 



204 DEPRESSION IN LABOR AND BUSINESS. 

The Chairman. What do you pay your salesmen aud other persons 
between the ages of sixteen and twenty-one? 

Mr. Beer. That depends upon the work they do. 

The Chairman. You have an average rate of pay ? 

Mr. Beer. Not exactly. It depends upon what the employes are 
doing — whether selling goods or engaged in packing and unpacking. 
We hire our employes by the year. The majority of them have been 
with us for a long time. 

The Chairman. What rate of wages do you pay them ? 

Mr. Beer. From $600 to $1,200 a year. 

The Chairman. $600 is the lowest amount? 

Mr. Beer. Yes. 

The Chairman. And $1,200 the highest? 

Mr. Beer. $1,500 is the highest. 

The Chairman. You spoke of the wants of merchants being greater 
for capital than for money ; what do you mean by capital ? 

Mr. Beer. I merely mentioned that in the way of illustration. You 
will probably remember that several years ago there was a great outcry 
in the West for more money, aud for a change of financial policy. At 
that time it appeared to me that there was no reason for that outcry. 
What the West requires (and the farther you go west the more the fact 
becomes evident) is capital for the development of the country. This 
great question of finance, in which greenbackers are calling for more 
money, is not defined properly, I think. 

The Chairman. It is your opinion that there is currency enough to 
carry on all the business industries of the country ? 

Mr. Beer. Yes, sir ; enough money to pay balances. 

The Chairman. Is there currency enough for all purposes, consider- 
ing the state of trade as it now exists ? 

Mr. Beer. I think the country has currency enough. 

The Chairman. I speak of this city, and of the country about here? 

Mr. Beer. This city has currency enough, because it is quite a com- 
mercial center. Whether the farther west has currency enough, it is 
hard for me to state. But with our modern system of doing business 
by bank checks, and ouly requiring the money actually for paying bal- 
ances, I think that a large volume of currency is not needed. It looks 
to me, that a great many people, when they cry out for more money, do 
not know what they mean. One of the essential needs for money is 
that it circulates quickly. Trade can only be good when money circu- 
lates quickly, and when it is changing bauds from one to another. 

The Chairman. That relates more to the transactions of the day 
than to the investments by way of capital. 

Mr. Beer. I, of course, draw a distinction between money aud capi- 
tal. 

The Chairman. Do you lack capital for the development of the 
country? 

Mr. Beer. Yes, I think so. I only call the circulating medium money. 

The Chairman. If a man makes a loan it is money. 

Mr. Beer. It is quite immaterial whether he gets it in gold or silver, 
or in paper, or in a bank check. 

The Chairman. But still it is money. 

Mr. Beer. Certainly it is money. It is capital the moment that he 
puts it in investment. 

The Chairman. And more of that capital could be employed than is 
employed ? 

Mr. Beer. Exactly. 



DEPRESSION IN LABOR AND BUSINESS. 205 

Mr. Cowgill. Do you know anybody in this city, or anywhere else, 
who wants to make a safe investment of any kind, and who is able to 
give proper security for the money that he borrows, who cannot obtain 
the money for any legitimate purpose 5 is there not plenty of money if 
the security can be furnished ! 

Mr. Beer. Yes, sir; most decidedly. They can get all the money 
they want. 

Mr. Cowgill,. For any kind of investment J 

Mr. Beer. Yes, indeed. 

The Chairman. What do vou call security; do vou mean government 
bonds? 

Mr. Beer. Whatever makes the man who lends the money safe. Se- 
curity of any character is only of relative significance. I think that 
United States bonds would be safe enough. 

Mr. Cowgill. And good notes signed by a good indorser would be 
also good enough security, would they not ? 

Mr. Beer. Yes, indeed. 

The Chairman. Then any business man can get from the banks all 
the money he wants provided he puts up unquestioned security ? 

Mr. Beer. Yes, sir. 

The Chairman. You would put the national bonds at the head of the 
list as to the character of security J ? 

Mr. Beer. Yes. The credit of the United States stands about five- 
eighths per cent, higher than the credit of Prussia. That is a very sig- 
nificant sign of the times. 

The Chairman. You regard United States bonds as the best security ? 

Mr. Beer. That has been shown. 

The Chairman. Since the collapse you have gone through a very hard 
and oppressive condition of things here, have you not J ? 

Mr. Beer. Yes ; quite so. 

The Chairman. Harder than was ever felt here before 2 

Mr. Beer. Xo doubt of that. It was a severer panic than was ever 
witnessed here before, probably. 

The Chairman. It depressed everything to a greater extent than ever 
previously i 

Mr. Beer. Yes. 

Mr. Cowgill. You do not know anything about the panic of 1837, I 
suppose ? 

Mr. Beer. No, sir ; I was not here at that time. 

Mr. Sherwin. When were the effects of the panic felt most severely 
in Chicago ? 

Mr. Beer. From 1S75 to 1877. 

Mr. Sherwin. And you have been on the up-grade since ? 

Mr. Beer. Eighteen hundred and seventy-eight was not very prosper- 
ous, either. 

The Chairman. You have got a foothold now by which you can main- 
tain yourselves ! 

Mr. Beer. Yes ; the indications are better. 

Mr. Sherwin here read to the committee and put in evidence the fol- 
lowing letter: 

Office of N. C. Thompson, 

Rocl-ford, III, July 28, 1879. 
Hon. J. C. Sherwin, 

Geneva, III. : 
Dear Sir : Your favor of the 23d has been received and contents noted. I hope your 
committee will do some good ; but it seems to me as if the investigation should have 



206 DEPRESSION IN LABOR AND BUSINESS. 

taken place two years ago at least. With silver remonetization and resumption (to- 
which the former was an essential preliminary J, the depression is passing away, and 
both business and labor are reviving. 

Thanking you for your courtesy, and trusting the investigation may tend to confirm 
a wise financial policy. 

I am, yours, truly, 

N. C. THOMPSON. 

Views of Mrs. Sarah 31. Mills. 

Mrs. Sarah M. Mills appeared before the committee as a volunteer 
witness. 

Mr. Cowgill. State what you represent. 

Mrs. Mills. I reside in Chicago, and have resided here for the last 
twelve years. I am a delegate from what is known here as the Liberal 
Reunion, an organization which discusses all those questions, provided 
there is neutral ground. It discusses all questions of public interest in 
a friendly and courteous manner. I am also a member of the Working 
Women's Union No. 1. I have been a member of the Philadelphia 
Society for five years. I have written out a communication which I will 
read to the committee. lama married woman ; my husband is living. 
He is attending to his business this afternoon, and I am attending to 
mine, just now. Very much of what I will present here to-day I have 
written at home with my husband. 

Mrs. Mills then read as follows: 

Gentlemen: I remember well the panic of 1837. I was then fifteen 
years old, and from that time I have been deeply interested in all the 
stirriug events of our times. Our national history is marked for the 
instability of our financial and industrial systems. The present disas- 
trous condition as I believe of the country is nothing more than a con- 
tinuation of the periodical attacks of a disease that had its origin in 
causes that are directly traceable to two fundamental errors of our fore- 
fathers: The first was the acceptance of the theory that the paper 
currency used in all the varied fields of industrial enterprise is depend- 
ent for its value upon the amount of coin money stored up in the vaults 
of the nation. Having no hidden treasure of glittering or even rusty 
coin with which to redeem their colonial paper currency, our fathers 
reaped the first fruit of their error in fiuding themselves poverty-stricken 
while their pockets were lined with money, money received by them in 
good faith, believing that the boundless resources of the country, when 
once it was free and independent, would insure its value. They believed 
the reign of industry, instead of a privileged aristocracy as in the old 
world, was to be the talisman of the nation, and make its promises to 
pay better than gold in the markets of the world. But, alas! British 
tyranny had enslaved the public mind. A century of alternate panic 
and prosperity passed away before it awoke to a knowledge of this fatal 
blunder that has made us a nation of paupers in a laud of plenty. " Not 
worth a continental" passed into a proverb, and from that time to this 
the financial legislation of this country has, with one exception, been 
one continued series of enactments tending to build up a mouied aris- 
tocracy in a so-called Democratic America. Thanks to Bonamy Price, 
England's gold bullionist missionary, and to our public-school system^ 
finance has finally passed from the realm of the occult sciences, and 
has become a national problem, which the people are to solve. I need 
not refer you to our great National Bank authorized to issue three dol- 
lars in paper to one in coin money, with which to redeem its issues, that 
culminated in a financial panic and political campaign that made Gen- 



DEPRESSION IN LABOR AND BUSINESS. 207 

eral Jackson President of the United States — lie who instituted that 
policy, based upon the maxim that " To the victors belong the spoils," 
which to-day rales our political parties — a policy that makes our politi- 
cal leaders choose men for office because of their availability, with but 
little regard for private integrity of character or ability. This first error 
of our fathers has been the parent of almost every other, and is greatly 
responsible for the universal spirit of toadyism and dishonesty which 
prevails throughout the country. It is also, I believe, responsible for 
the mania to do business on a large scale with an inadequate capital, 
for the system of monopolies, of ruinous speculations, and of the general 
disregard of the rights or welfare of the working classes which form 
so prominent a part of our legislation, and which today stigmatizes as 
tramps our sturdy workingmen who are compelled to leave their homes 
and families in search of employment. I need not remind you of the 
banking policy that succeeded the fall of the great Rational Bank, which 
flooded the country with what are now known as u Wild Oat Banks " y 
a system that re-enacted the finaucial farce of issuing a paper currency 
based upon the canard that a coin money basis gives to it its value. The 
bursting of this financial bubble brought on another panic and unset- 
tling of all values, resulting as now in the almost universal ruin of the 
best business talent of the country, and the demoralization of all classes 
of industry. Were its effects not so tragical, we could laugh at the 
infatuation which still clings to a theory that has been practically ex- 
ploded as often as every decade during the last century. 

Permit me, gentlemen of the committee, for a short time to call your 
attention to the second fundamental cause of our present as well as our 
past industrial troubles, taking up the first cause again where the dis- 
ease culminated in civil war, when the foundation was laid for a curative 
process to begin to recuperate the spent energies of the nation. 

This second cause was the toleration of a system of organized human 
slavery, absolute and despotic as has ever existed on our planet. From 
that moment the " irrepressible conflict V between capital and labor began 
in republican America. It was not the slavery of the black man alone 
that caused the honest and true men and women of those times to take 
up arms against this inhuman system, but it was a principle lying 
deeper and broader than many of them knew at the base of all civiliza- 
tion, the progress and development of the masses of the people. Day 
by day and year by year legislation favored capital and eucroached 
upon the rights of the wage-worker. It honored and patronized the 
man of money, while it neglected and in a thousand ways contemned 
the mau who by daily toil earned his bread. It fostered and protected 
the man who received thousands of dollars annually from the industrial 
enterprise in which he had invested his money, while it refused its sup- 
port and protection to the man who invested his bone, muscle, aud 
brain in the same enterprise, and received therefor only, at most, but a 
few hundred pennies. Our legislators have been penny wise and pound 
foolish, and the result is that we are in the midst of a revolution that 
threatens to change existing laws and customs. Let us hope that we 
shall have wisdom enough to keep the social pendulum from swinging 
to the other extreme, and causing a reign of terror that will exceed 
our present deplorable business prostration a thousand fold in its dis- 
astrous influence upon the public weal. 

Already the waves of popular uprisings foretell the coming of a 
mighty storm in the near future, and those who have their fingers on 
the public pulse are astonished at its tumultuous throbbings. This 



208 DEPRESSION IN LABOR AND BUSINESS. 

Congressional committee denotes to us that those who are standing in 
high places are aware of the danger and are preparing for it. 

The second cause of our troubles was removed by our civil war, and 
here a new phase or element entered into our political conditions and 
controlled the industries. I might say two elements were evolved from 
the war, which are destined to have either a most beneficial or disastrous 
effect upon our country. They are molding our, institutions already, 
and both directly and indirectly have been potent causes in producing 
the present prostration of our industries. They are the two rival finan- 
cial systems known as the greenback and the nationalbanking systems. 
The greenback opened the eyes of the country to the advantages of hav- 
ing a currency free from the manipulations of middle-men or schemers, 
usurers, bankers, and all the class legislatiou of the past seventeen 
years has only succeeded in opening them wider and clearing their 
vision. The people, the voters of our country, are learning that this 
national banking system was and is the potent power that shuts them 
out from all hope of bettering their condition. They know (that is, the 
thinkers do, and their name is legion) that our present financial policy 
is laying the foundation of a privileged aristocracy, who do not desire 
to invest their moneys in industrial enterprise, but are surely preparing, 
by buying up large quantities of land, factories, real-estate properties 
of every kind, machinery, &c, after having depreciated their value 
by legislation, as they did the greenback, making gold the standard, 
and demonetizing silver, even to the destruction of our unit of value, 
the silver dollar. I say they are preparing the way, through legisla- 
tion, for what they terra " a strong government," that is, the empire. On 
the other hand is the revolutionary element of the socialistic party. 
Thoroughly organized and disciplined, arbitrarily controlling the votes 
of their members, acting as a unit, in this city alone, where but only some 
few years ago less than ten men formed a nucleus of the party, they 
polled 12,000 votes at our last municipal election. They make no secret 
of their object and aim. They openly declare that they welcome the 
present disastrous state of our industries, and do not desire to amelio- 
rate the condition of the working classes, knowing that it will hasten 
the time when a commune or governmental ownership of all the means 
of labor will be inaugurated. Between these two forces our free insti- 
tutions are being ground into powder. It is this that appalls the hearts 
of our best men and women. It is these two contending forces, evolved 
from the war, that paralyze industry ; that hold real estate and all 
other properties at a mere nominal value. And at present there seems 
to be no middle course marked out to hold the balance of power, and 
save us from shipwreck amid the breakers of ignorance and despotism 
in which our noble ship of state is now rolling. 

A currency of paper money issued directly to the people by the gov- 
ernment for a medium of exchange, its volume regulated by the needs of 
the country, which can be estimated by statistics, would do much to re- 
store confidence and set the wheels of industry in motion. Coin money, 
asnow used by the nations, should, in a free country, be abolished entirely, 
and bullion or the precious metals in quantities of weight, to meet the 
demand for coin money, take its place, through governmental action, 
leaving its price, like that of all other products, to be regulated by the 
usual laws that govern prices. Legislation could protect the working 
classes in forming associations greatly by adding to our present joint- 
stock laws the privilege of limiting the amount of stock to be held by one 
person. Overproduction, to which many ascribe our present condition, 
is merely underconsumption. Associated effort will and must in time 



DEPRESSION IN LABOR AND BUSINESS. 209 

regulate this difficulty. Machinery by associated effort can be made 
available to the wage-worker and do away with the present need for 
eight hour leagues. Isolated individual effort is doomed, and the peo- 
ple will be compelled to go to the wall or co-operate. Give the people a 
free currency, that cannot be manipulated by Wall street brokers, punish 
men who make corners on any product, thus indirectly robbing the 
people, compel boards of trade to do honestly their work, and confidence 
will be restored, the times will revive, and the country be saved. 

SARAH M. MILLS. 

Views of Mr. Lyman E. Be Wolf. 

Mr. Lyman E. De Wolf came before the committee at its invitation. 
He said in reply to preliminary questions : I have been a resident of 
Chicago for thirty-two years ; my occupation is that of a lawyer ; I have 
been practicing law forty- two years. I learned my profession in Wilkes 
Barre, Pa. I have not been much engaged in the legal profession, but 
have been always engaged in buying and selliug lands. I have been 
also engaged in railroad controversies, and have been familiar with the 
whole northwest portion of this State for the last twenty years. I have 
come in contact with all conditions of the farming community. I have 
always had an office here in this city. I have come into close contact 
with the industrial classes. 

The Chairman. State in a general way what, in your judgment, has 
produced the calamities which we have suffered in this country for the 
last ten years. 

Mr. De Wolf. The difficulties arose almost entirely out of our money 
system and out of our mode of doing business. We have what is called 
the credit system here. It came from Great Britain, where it has existed 
from 1091 to the present time. That credit system has been always 
liable to produce fluctuations, and those fluctuations have been always 
larger and greater in proportion to the exigencies under which they 
arose, such as war and deranged industries. In 1857, previous to the 
war, we had built more railroads" and contracted more debts than we 
were prepared for. In other words, the corporate system had begun ; 
had developed to a greater extent than ever before. Roads were built 
very largely on the proceeds of stocks which represented on their face 
$100 for every 810 or 815 derived from them. The Ohio Loan and Trust 
Company failed in 1857, and that failure depressed our industries very 
badly. We had not recovered from it at the time of the war When 
the war commenced there was a good deal of bank paper throughout the 
country which was based on Southern bonds, and as a matter of course 
that paper went down from thirty cents on the dollar to nothing, I my- 
self handled a good mauy hundred dollars of it, and lost in that propor- 
tion. The country was badly in debt at that time. About 1860 corn 
was frequently sold at ten cents a bushel. Twice since I have been in 
this State corn has been used here as fuel. When the war commenced 
there was no market for anything for a short time until the government 
commenced issuing money. From the excessive demand of the govern- 
ment for products prices rose, and labor rose in a corresponding degree. 
The prices did not rise, perhaps, as fast as gold, but still they kept along 
in the neighborhood of gold until gold ran up to 82,80. Wheat ran up 
to a large amount; farming was stimulated, and men paid their debts. 
I have known myself farmers who were indebted 8100, 8500, aud a 
$1,000 who paid their debts during the first years of the war, and who, 
besides, frequently bought double the amount of land they had. In this 
H. Mis. 5- 11 



210 DEPRESSION IN LABOR AND BUSINESS. 

city property rose, wages rose; men bought their homes and paid for 
them. When the war ended, and up to 1868, we had less debts than 
ever I knew since I have been on the stage of action. There were more 
farms paid for, more railroads built, more substantial improvements, 
more manufactories built in the Northwest up to 1868 than there had 
been for twenty-five years previous to that time. It is an inevitable law 
that whenever you increase the demand for commodities prices will rise; 
and so the farming and laboring classes received the benefit of the high 
prices. That this was a permanent gain on their part is evident by the 
fact that they paid for their property, and that they were never so free 
from debt. In 1868 the gold gamblers in New York fixed upon General 
Grant to be the President; and I watched the movement at the time 
with great interest, because I saw that there was going to be a conver- 
sion of the national debt, and that there was going to be a contraction 
of the currency, and that out of that would come destruction to our in- 
terests. I stumped it all over the country at that time trying to get this 
idea into the heads of the Democrats particularly, but they could not 
see it; they could not see where they were going to have this pressure. 
Then men began to exhaust their money. Where I could collect $500 
before I cannot now collect $75. You cannot borrow money and carry 
ou business in the condition in which labor is now, for the reason that 
all the money that you get has got to pay back mortgages. An estab- 
lishment which employed fifty men will not now employ more than 
thirty-five men. The large majority of working men get only 50 to 
75 cents a day. I have had two sons and a son-in-law receiving a 
dollar a day where they had been receiving two or three times that 
amount, and have been out of employment half of the time besides. As 
it is with me so it is with my neighbor. I have done about as much 
business as ever, but I find difficulty in collecting enough to make a 
living. I have large amounts standing out which I cannot collect. 
Under this state of facts the community is left in this way. Part of the 
summer men are at work for maybe five or six weeks, but in the winter 
they have nothing to do. Many men in this city have been obliged to 
cut down their tea and coffee, and their bread and butter, and among 
professional men there is great difficulty in making a living. A few 
days before this committee came here the Inter-Ocean published 308 
seven-column pages of property advertisements for sale for the non- 
payment of taxes, and there have been two strikes on the tapis. The 
land sales published in last Sunday's Tribune were said to be 103 or 104, 
amounting to $286,000, and I venture to say that in nine-tenths of those 
land sales the property is purchased in by the creditors, because they 
could not get bids equal to the amount of their indebtedness. The 
Connecticut Insurance Company started in this city in 1847 with about 
$10,000 capital. That company has now a capital of $100,000 on paper, 
and has more than $2,000,000 of property in this city to-day. As it is 
with that company so it is generally throughout the State. There is 
hardly a building in this city that is not to-day mortgaged for more than 
it is worth. This is not because there is not plenty of business here, but 
it is because the government contracted the circulation. This contrac- 
tion was commenced by Mr. McCulloch, and was followed up by Mr. 
Bristow. These tax sales show the condition of labor in this city. The 
laboring classes cannot get employment. Poor as I am, I have men and 
women coming to my house constantly for a meal of victuals. There is 
not a week during the winter that I have not two or three such calls. 
People Come into my office and beg for something to eat. The jails are 
full. We are. building new poor-houses— large, magnificent ones. Our 



DEPRESSION IN LABOR AND BUSINESS. 211 

State prisons are full, and men are glad to get into them in the winter 
months in order to live. 

The Chairman. What number of people in this city have gone 
through bankruptcy ! 

Mr. De Wolf. Between six and seven thousand in this district. But 
that probably does not show one-fifth of the amount of actual failures. 
There are a few large business houses like Field & Leiter who are un- 
doubtedly doing well ; but there is not more than one man out of ten 
in business here to-day who is making more than a living, and a large 
number of them are exhausting their capital. 

The Chairman. You have come to the conclusion that prosperity is 
not a fixed fact in this city ? 

Mr. De Wolf. Not by any means. If we had not immense resources 
in the country back of us we would be to-day in a state of poverty. It 
is the country back of us that keeps us up, and that will make Chicago 
finally a great city. But the men who have employed their labor and 
capital here will lose their property. The hotels in this city were origi- 
nally owned by men who were able to pay for them, but it is not so now. 
The bank property near this hotel has been sold out under trust deeds 
of sale. All the property lying between here and the Illinois Central 
Eailroad depot has fallen in value so that it could not be sold to-day for 30 
cents on the dollar of what it cost. This is not because there has been 
inflation, but is because there is not money enough to keep property at 
its proper level. With our 400 arrivals and departures of railroad trains 
every day, with our three thousand miles of lake coast, we would be 
to-day, if there was currency enough in the country, flourishing. I have 
been here since Chicago had a population of 12,000 people. I have been 
through two or three depressions here — in 1837, 1847, and 1857. I can 
remember Chicago back as far as 1827 ; I can remember a time when 
we did not see a piece of coin in circulation, and when we used to barter 
pork for meat and sugar. At that time butter was a unit of value ; so 
much butter, wheat, and rye were paid for a coat, and so much for a 
plow, I have been through all that, and I have never seen troubles 
reahing down so low as those of to-day. All over the Northwest farms 
are mortgaged to their full value. 

Mr. Cowgill. How did the indebtedness for these mortgages arise ? 

Mr. De Wolf. By borrowing money. 

Mr. Cowgill. What was the money borrowed for ? 

Mr. De Wolf. To make improvements and to pay balances due on 
the land. 

Mr. Cowgill. Does not that show that farmers made their improve- 
ments injudiciously — that they made larger improvements than were 
justified % 

Mr. De Wolf. Under this system, yes. 

Mr. Cowgill. Under any sy tern 1 

Mr. De Wolf. No, sir; they had gone through such things years and 
had borrowed money before in the same way as they borrowed it now. 

Mr. Cowgill. And did they not pay off that former indebtness by 
furnishing the products of the farm to the government, whose armies 
created the market for the products ? 

Mr. De Wolf. Certainly. 

Mr. Cowgill. Could such a market as that be kept open without 
another war ? 

Mr. De Wolf. We do not want another such war. 

Mr. Cowgill. But when the war was over, and when the armies 
were disbanded, and when the government was no longer clothing and 



212 DEPRESSION IN LABOR AND BUSINESS. 

subsisting and furnishing these armies with munitions, there was no 
longer a market made by the government for the products of the farm. 

Mr. De Wolf. There was not. In 1850 our public debts — railroad, 
State, municipal, and national — amounted to $9,000,000,000. To-day they 
amouutto $32,650,000,000. There is a state of industry in every nation 
corresponding with its indebtedness. 

The Chairman. Have you any suggestions to make in the way of 
remedy ? 

Mr. De Wolf. The remedy will be to make a system by which there 
will be national money. Let the money be based on bonds, and let the 
bonds be iutrocouvertible, and pay 2 per cent, interest. 

The Chairman. What amount of currency would you have? 

Mr. De Wolf. That would be determined entirely by the amount of 
products, and by the population. 

The Chairman. Have we enough of currency to answer all purposes % 

Mr. De Wolf. No, sir. I would issue that money on the basis of a 
loan. 

The Chairman. You think that the condition of the country requires 
more money than is now afloat % 

Mr. De Wolf. 1 do. 

Views of Mr. Harvey B. Kurd. 

Mr. Harvey B. Hurd came before the committee at its invitation. 
He stated in reply to preliminary questions : 1 have been*,a resident of 
this city for thirty-four years; I am an attorney at law ; I have no 
special statement to make. I supposed that I was called to answer ques- 
tions that would be asked me. 1 have no special theories to advance. 

Mr. Oowgill. What we want to learn is what you consider as the 
cause of the present depression of labor and industry in the country (if 
there be such a depression), and what the remedy would be. 

Mr. Hurd. I have some views on the subject which are based on my 
observation and experience ; but I have not given the subject sufficient 
thought to form a theory. It occurs to me that the causes of the de- 
pression which we have had was the panic of 1873, and the chain of 
events which followed. W T hat caused the panic I think it very 
difficult for any body to inventory. Doubtless there were many 
causes contributing, and among them were perhaps overspeculation, 
the war, and various other causes which disturbed the healthy condi- 
tion of trade. You might as well undertake to find out the cause 
of an epidemic as the cause of a panic. A great many causes un- 
doubtedly contributed to produce it. Since the panic, from my obser- 
vation of what has taken place, it would seem to me that the remonetiza- 
tion of silver is a prominent cause, and the determination to resume 
specie payment. These two causes have had their effect, more in conse- 
quence of the fear produced on the public mind than in consequence of 
the real fact o£ resumption. In 1873, for instance, I was quite a large 
owner of real estate which I could have sold at very good prices. But 
when it was generally believed that resumption was to take place, the 
question which I found in almost every man's mind was, "What will be 
be the result of this on values % " Immediately followed a distrust in real 
estate and in all other kinds of property. Consequently people began 
to leave off investing at least in real estate ; they began to discontinue 
purchases, and to discontinue improvements. The first effect produced 
was the worst effect, but its progress was accumulative. The downward 
tendency was accelerated by what we already know. For instance, 



DEPRESSION IN LABOR AND BUSINESS. 213 

I had a valuable lot well located for residence purposes and worth about 
$10,000. A builder came tome and said "I would like to build some houses, 
and I have got 810,000. We could build two or three houses on jour lot. 
If I could do it safely I would purchase that lot and build those houses." 
We thought the matter over, looked at affairs as they stood, and came to 
the conclusion that it was uot safe to build. If he had put his money 
into those buildings, he and I together, we would probably have lost our 
investment. As nearly as we can ascertain the lot and buildings would 
not be worth as much money now as he had in his hands at the time. He 
would not buy the lot and would not build the houses. I lost my sale 
and he lost the profits lie expected to gain, aud the people who would 
have been employed on the building were unemployed. I think that in 
that little illustration we may learn a good deal as to the cause of men 
being thrown out of employment, and as to the causes of an apparent 
sufficiency of money. That $L0,000 in this man's hands was not em- 
ployed as it would have been if times were good and if the people had 
taith in investment. That money was thrown on the loan market, and 
there was $10,000 more apparently to be borrowed than there 
would have 'been if the times were good. There was a surplus of labor 
and an apparent surplus of capital from the same cause, namely, de- 
pression and lack of faith in business. 

Mr. Cowg-ill. You say that this $10,000 which this builder talked 
about investing was thrown on the loan market. Of course if it found 
a borrower it went into the hands of some man who was not so pru- 
dent as yourself and friend , and who was willing to take the risk. 

Mr. Hurd. I do not know what became of it. 

Mr. Cowg-ill. Is it not probable it did, and have you not known in- 
stances of that kind J ? 

Mr. Hurd. I think the instances which I have known generally have 
been of that kind — that the money has been loaned on what seemed to 
be good security, and that the property which has been taken as se- 
curity has been generally bid in. 

Mr. Cowgill. Did you not, during all these years of inflation, have a 
distrust as to what would eventually be the result ? Did you not be- 
lieve that it would prove disastrous to those who were embarking in 
that kind of wild speculation. 

Mr. Hurd. Yes; although I ought to say this: I had the question 
always in my mind, '"When will come the end of this upward tendency?" 
I had no doubt that the end would come. 

Mr. Cowgill. Do you believe that the inflation of the currency, which 
was oue of the results of the war, was the cause of inflating the price 
of property all through the land, and of begetting this state of indebted- 
ness which has caused the depression and financial distress? 

Mr. Hurd. I will answer that affirmatively. I think that the war 
created, or put in operation many industries which were useless at any 
other time, and consequently we found ourselves upon a basis on which 
we could not remain. There was a necessity for some contraction, but 
I do think that it has been terribly cruel in its exactions. Let me take 
my own case as an illustration ; 1 assumed an indebtedness of $50,000. 
I took as good security as, in my judgment, I could get. It was notes 
on real estate to the amount of $50,000, and I supposed that I had more 
than double, and in some cases treble, security as a counter security 
against the assumption of $50,000 which I made. Every man whose 
paper I had to secure that $50,000. has gone to the wall and the prop- 
erty which I have taken has dwindled to such an extent that I dare not 



214 DEPRESSION IN LABOR AND BUSINESS. 

sell it and cannot take into my own hands on account of the burden of 
taxation upon it. 

Mr. Cowgill. And that grew out of the fact that the product was 
unproductive, or that it was producing nothing compared to the amount 
of the value which you put upon it at the time ? 

Mr. Hurd. My argument would be a little different from yours. It 
would be this: that in consequence of the contraction of the currency 
and as fairly resulting from it, property was not demanded. Conse- 
quently it was not useful. Tbere was no market for it. And it has gone 
so low in consequence that it is a slim security. 

Mr. Cowgill. I heartily concur with you as to the necessity of pub- 
lic confidence. But is it not your opinion that what the country needs 
more at this time than anything else is to be let entirely alone so that 
the people may once more have confidence in the stability of things % 

Mr. Hurd. What we need more than anything else perhaps is a res- 
toration of confidence, because I recognize that faith in business "is the 
substance of things hoped for," quite as essential in business as in religion. 
With regard to the policy of the government in the matter of finance, I 
am not radical ; I do not believe in an unlimited currency. ■ I believe in 
the government taking such acourse as a prudent man would take under 
the circumstances. Thesickman is convalescing; I would give him some 
nourishment and perhaps a little stimulant, but I would not over stimu- 
late him ; I would not make him drunk. He was drunk before. 

The Chairman. Have you an idea that the prosperity of the city of 
Chicago is thoroughly established at this time % 

Mr. Hurd. I have an idea that the tide has turned ; that we have 
seen the darkest days ; that improvement has decidedly commenced. I 
speak now from my own observation. I am familiar with the business 
of many wholesale establishments, and their members all tell me that 
business is improviug. Speaking for myself as an owner of real estate, 
I may say that I have had many offers of late very much more favora- 
ble than I have had before since the panic. I think that confidence is 
being restored, and that business is becoming prosperous, and that if the 
policy of the government be reasonably liberal we shall have prosperity. 

The Chairman. Would you recommend us to suggest to Congress 
the idea of letting you alone, or of putting a little more money in circu- 
lation % 

Mr. Hurd. I should like very much if you would put silver on the 
basis on which it was before it was demonetized. And as to the cur- 
rency I would say this : I would not decidedly inflate, but I would take 
a fatherly care of it, in a business point of view, and in proportion as 
we need it let us have a little stimulant. Mr. De Wolf spoke of our tax 
advertisements and tax sales of property here as an indication of the 
condition that we were in. I do not concur with Mr. De Wolf on that 
point. The fact is that our revenue law has been such up to this time 
as to offer an inducement to tax-payers to defer payment of their taxes to 
the last moment, and our large list of advertised property for tax sales 
is no indication of our inability or of our unwillingness to pay taxes. 

Mr. Cowgill. Is it not a fact that, if we need more currency, we have 
all the law necessary to enable the people to get as good a currency as 
we may have need for, without any further legislation on the subject! 

Mr. Hurd. I do not think that my opinion on the subject is very val- 
uable. Such as it is, I will give it to you. I look very much to adjust- 
ing the system that we have. If more business requires more currency 
in this place or in that place, it can be furnished through our national 
banks. If, by and-by, our business requires less currency, less interest 



DEPRESSION IN LABOR AND BUSINESS. 215 

oil the part of the national banks will contract it ; tbey can retire a 
part of their currency. However, I am not disposed to speak against 
the greenbacks. I should be glad if our volume of greenbacks was a 
little larger, but I am not sure as to the policy of enlarging it. 

The Chairman. You would prefer enlarging national bank currency 
to enlarging greenback currency ? 

Mr. Hurd. I cannot say that I would; but I would say that it seems 
to me that a flexible currency is the best ; and it seems to me, also, that 
we find that flexibility in the national banks which we need and which 
most likely we could not get in a currency issued by the nation, and 
under the control of an autocrat, as it necessarily is when it is under 
the control of the Secretary of the Treasury; he has too much power 
over it, and can control it too readily. 

Views of Mr. F. F. Munson. 

Mr. F. F. Munson appeared before the committee in response to its 
invitation. He said in reply to preliminary questions : I am a resident 
of Chicago, and have been for nine years; my occupation is furnishing 
material for building — one kind of material. 

The Chairman. Give us a statement of the condition of this city in 
reference to the labor question. 

Mr. Munson. There have been a great many laborers out of employ- 
ment for a number of years, commencing with the panic of 1873 ; while 
iu my business I do not employ a great many men, I have had more calls 
this season than usual; that is, there seemed to me to be as raauy men 
out of employment ; but at this time of the year there is more work do- 
ing than there will be in a few months hence. Everything connected 
with the building business will be pretty lively for two months yet. 
Men are getting more employment now than they have been, and they 
are getting a little better prices in the building liue. They are getting 
better prices for brick, and they pay more for wages. We are also get- 
ting better prices, because almost all in our business, except ourselves, 
have gone out of the business. What percentage of men are out of em- 
ployment, and are anxious to procure employment, it is very difficult to 
say, because an immense number of men have left the city on account of 
their inability to get employment. I do not think there are many in the 
city who are out of employment. I should not think there were more 
than 10 per cent, of unemployed laborers in the city, although, perhaps, 
the percentage may be considerably more than that. 

The Chairman. The statistics that have been handed in to the com- 
mittee give that information pretty correctly, and show, I think, that 
the number of unemployed is more than 10 per cent. How is it with 
regard to wages? 

Mr. Munson. Wages, as I stated, are a little better than they have 
been for the last two years. We are paying just the same this year as 
we paid last year. 

The Chairman. When did wages commence improving ? 

Mr. Munson. Teaming and the other branches immediately connected 
with our business are a little better this season. Our business is a little 
better this season, because more persons have gone out of it. They 
have been crushed dowu to starvation prices. The starvation prices 
commenced with the panic, and were bad last year. The improvement 
in oar particular business now is because there are less teams in the 
market, l?ke teaming is better. We are getting better wages for draw- 
ing brick and sand. I am in the sand business, We rent a large 



216 DEPRESSION IN LABOR AND BUSINESS 

amount of dock room, and we are renting it for less than the tax upon 
the property. That may be prosperity to ns, but it is not much to the 
men who own the property. The sand is brought from the lake. We 
dredge it near the shore and briug it in. I furnished sand for the 
building of this hotel. The otherpersons who used to be in the business 
have all gone out of the business, so that we make a little better show 
this year. We are doing very well now, because all the others have 
gone out and left us alone. We are the only survivors. 

The Chairman. Your competitors are all out of the way ? 

Mr. Munson. They are all out of the way. I lived on almost nothing 
for five or six years. I did not treat myself even to an apple for fear of 
my being short in paying my men. That was my policy. When the 
contraction of the currency came I had to contract expenses. 

Mr. Cowg-ill, Was not that a pretty prudent course to pursue ? 

Mr. Munson. Yes, it was a prudent course; but I do not see where 
the prosperity came in. I once used to live like other folks, at the rate 
of some $2,000 a year, but I cut myself down to five or six hundred dol- 
lars a year. I wore a pair of shoes for two years. I had been through 
panics before, and I knew what had got to come. I am not a bank-note 
man myself; I have been cursed enough by them. I am a legal-tender 
man every time. The greenbacks are the only currency we ever had in 
this country that were fit to be called currency. 

The Chairman. You are evidently improving now? 

Mr. Munson. I am improving, certainly. 

The Chairman. How is it with your friends in other branches of 
business! 

Mr. Munson. Those fellows who have got a little real estate (I am 
glad that I have none) are offering it at about one-fourth of what it was 
worth a few years ago. Eight in the heart of Chicago, on the north 
side of the river, there was a lot owned by an old gentle \ an, on which 
he borrowed $2,000 after the fire, and has since paid $200 a year inter- 
est on it. I can buy that property to-day for less than the money which 
the owner has paid on it in interest and taxes. 

The Chairman. There is a better state of things, however, now than 
there was a year ago ? 

Mr. Munson. It is better for those who did not get in debt. 

The Chairman. Do you think that there is currency enough for the 
ordinary business affairs of the city? 

Mr. Munson. I do not think there is one-fourth enough. There may 
be enough so far as the banks are concerned, and for persons doing com- 
mercial business. Banking business is one kind of business, and the kind 
of business that I am in is another kind. We cannot get money at any 
reasonable rate of interest to invest in building. Commercial men can 
get money because there is a foreign demand for grain, such as never 
existed before. The grain men have been prospering while labor has 
been starving to death. I wanted to borrow $8,000, and I offered to put 
up $16,000 as security for it, but I could not get the money. 

The Chairman. What security did you offer % 

Mr. Munson. I offered the security of a business, real estate, prop- 
erty, and machinery. Of course I did not offer United States bonds as 
security. 

The Chairman. How would it have been if you had had a substan- 
tial man on your paper % 

Mr. Munson. If I could have got signers whose names were good, I 
could have got the money from the banks for sixty or ninety days, but 
these lenders are not the kind of men that we deal with. We cannot 



DEPRESSION IN LABOR AND BUSINESS. 217 

get money from the banks because they only do a commercial busi 
They are not lending money for building, or for general purposes. Such 
money has to come through money-owners, and they are getting 8 per 
cent, for it, and would not loan enough to put up a decent building on 
property. In regard to money, we never did have too much. The rates 
of interest in this western country were always too high even at times 
when the currency was said to be inflated. 

Views of Mr. Michael Haley. 

Mr. Michael Haley appeared before the committee at its invitation. 
He said in reply to preliminary questions : I reside in Grundy County, 
Illinois. I have been in the West for about forty-two years. I had 
something to do in the land business. I helped to build the Illinois 
and Michigan Canal. I had some interest in boats. I am in the quarry 
business and in the farming business. 

The Chairman. State what the condition of agriculture is generally 
in that section of the country with which you are acquainted. 

Mr. Haley. The people in the farming portion of the country are 
"hard up." The farmers in the State of Illinois have mortgages on their 
farms to the amount of about $300,000,000. The records will show that. 

The Chairman. When was the money borrowed — in times of infla- 
tion ! 

Mr. Haley. No, sir. There was very little money borrowed by the 
farmers in 1868; there was very little indebtedness then. Everything 
was prosperous at that time. I think that the most prosperous time 
that this country ever saw was between 1865 and 1870, and up to 1871. 
The agricultural interests were more prosperous then than at any time 
since I have been in the country. 

The Chairman. What depresses agriculture now ? 

Mr. Haley. The lack of money and the high rates of interest paid 
for it. 

The Chairman. What rates of interest do the farmers have to pay 
for their money accommodations? 

Mr. Haley. Up to this time the rate has been 10 per cent., besid 
bonus for getting the loan. Sometimes they have to pay 5 per cent, for 
getting the loan. I have known per cent, to be paid for getting the 
loan, together with 10 per cent, interest — the bonus is paid to the 
middleman or broker. 

The Chairman. What have the loans been made for? 

Mr. Haley. There has been a great deal of the lands of this country 
held by speculators, which lands came into the market after the demand 
for produce increased. These lands passed into new hands. A portion 
of the purchase money was paid, and the remainder was covered by 
bond and mortgage, running sometimes twenty or twenty -five years. 
All the southern part of our county and a part of Livingston County, 
all the western part of Kankakee, and a great part of the southern part 
of Will County have been settled from 1866 and 1872. These lands 
were sold to second hands, and in the making of improvements a good 
deal of debt has been incurred. Then the contraction of the currency 
came, and with it a depression in prices, so that the accumulation of 
interest has, in many instances, wiped out the farmers entirely. 

The Chairman. They bought their lands when there was more money 
in circulation and when the currency was much larger than it is now ? 

Mr. Haley. Yes. 



218 DEPRESSION IN LABOR AND BUSINESS. 

The Chairman. Have there been many foreclosures of mortgages on 
such property ? 

Mr. Haley. There have not been so very many foreclosures yet, but 
there are a great many mortgages ready to be foreclosed, and the farmers 
are living just at the mercy of the mortgagee. 

The Chairman. In other words, the mortgagee does not want to take 
the property for the amount of the mortgage ? 

Mr. Haley. No, sir. The interest on the money borrowed on many 
of these farms will exceed the rent. 

The Chairman. Are the farmers in a worse condition at this time 
than they have been for two or three years back ? 

Mr. Haley. I think that they are in no better condition. The inter- 
est on the money due is increasing faster than the farmers are able to pro- 
duce. 

The Chairman. What is the average price of wheat ? 

Mr. Haley. Corn and pork are our principal production. We get for 
corn 30 to 32 cents a bushel delivered on the canal within thirty miles 
of Chicago. 

The Chairman. What do you get for pork on the foot ? 

Mr. Haley. Last winter we got from $2.75 to $3 a hundred, and some- 
times as high as $3.15. We are getting now from $3 to $3.20. 

The Chairman. Then there is an improvement in that? 

Mr. Haley. The pork in our country has all gone forward very much, 
and as there is less supply the demand brings up the price a little. 

The Chairman. Your idea of the relief that ought to be afforded 
would be an addition to the currency ? 

Mr. Haley. Yes. 

The Chairman. To what extent would you carry that ? 

Mr. Haley. We should have enough of currency to float busiuess. 

The Chairman. You do not want to have the currency inflated? 

Mr. Haley. I never saw what has been termed inflation. I never saw 
a man who had more money than he wanted. 

The Chairman. Have you seen a time when somebody had more 
more money than he ought to have ? 

Mr. Haley. I do not know that I have. If a rutin gets a thing legiti- 
mately he has a right to it. But if .the law gives a man a right which I 
have not — a right to issue bank-notes and to draw interest from the 
government on his bonds, and then interest on the money which he cir- 
ulates, he gets two interests on the same amount and is, besides, ex- 
empt from taxation, while we are obliged to pay the taxes and to pay 
him his two interests. We do find some objections to that state of 
things. 

The Chairman. Do you suppose, from the indications, that the dawn 
of better days. is approaching ? 

Mr. Haley. I see nothing better ahead. 

The Chairman. Except in the way of giving you more money ? 

Mr. Haley. There has got to be something done to relieve the pro- 
ducing classes from these high rates of interest. Something must be 
done or the farmers will have to " throw up the sponge" and take Hor- 
ace Greeley's advice and go west. We organized a farmers' organization 
some years ago and made war upon the railroads and middlemen, as we 
supposed it was they who were doing all the mischief ; but there hap- 
pened to be among us some greenbackers who showed that it was the 
national banks who were doing the mischief, and not the railroads nor 
the middlemen. 

Adjourned until 10 o'clock to-morrow. 



DEPRESSION IN LABOR AND BUSINESS. 219 

Chicago, August 1, 1870. 
Views of Mr. William Stewart. 

Mr. William Stewart appeared before the committee at its invita- 
tion. He said, in reply to preliminary questions : I am a wholesale 
grocer, doing business in Chicago. I have been engaged in business 
here since 1851— not consecutively in the same business. I have been 
in the grain and lumber business and in the grocery business. I have 
been nearly twenty years in the grocery business. 

Mr. Cowgill. Do you think that there is at this time any depression 
in labor and business in this city and country ! If so, state what, in 
your judgment, has caused it. 

Mr. Stewart. I think that there has been a depression, but there is 
a recovery from it. My opinion is that the cause of it was the inflation 
of the currency and the speculation which that inflation stimulated. 
There is not so much depression now as formerly. 

Mr. Cowgill. What, in your judgment, will remedy the remaining 
evil ? Do you think that any legislation by Congress can afford any 
relief, or do vou think that there should be anv legislation bv the 
State 2 

Mr. Stewart. I have aconvictiou that the object of legislation is the 
welfare and security of the people. I do not think that any improve- 
ment whatever in regard to business can take place through legislation. 
I think that private affairs will regulate themselves. We are now on a 
financial basis where every man can ascertain exactly what he is going 
to obtain for his labor, and how much his wages will procure for him. 
The object of legislation, in my opinion, is to encourage industry, effort, 
and intelligence among the people ; and no people having a currency 
that is continually fluctuating, and the value of which at any future 
time they cannot tell, can be a saving, economical, thrifty people, because 
I believe that that kind of currency leads to speculation, gambling and 
vice. 

Mr. Cowgill. What is your opinion as to the sufficiency of the cir- 
culating medium of the country at this time to answer all the monetary 
needs of the country ? 

Mr. Stewart. The law of supply and demand is as strictly applica- 
ble to finance as it is to mercantile business, and I can only judge from 
the rates at which money.can be obtained that there is an abundant 
and superabundant supply of it at the present time. Our needs for 
money are much greater at some times than at other times, and the 
supply ought to be left entirely to the demand. 

Mr. Cowgill. What is the condition of the laboring classes at this 
time, so far as your observation enables you to judge, as compared with 
what it was a year ago f 

Mr. Stewart. There is quite an improvement. Those who were at 
that time idle are now employed, and at remunerative rates, so as to 
keep them in reasonable comfort. 

Mr. Cowgill. What, if anything, do you know about there being a 
large proportion of the laboring classes here who are unable to get em- 
ployment ? 

Mr. Stewart. I think there are very few who are willing to work for 
such remuneration as will afford them all the necessaries and some of 
the comforts and luxuries of life who do not find employment readily. 
There are a number of young men at all times seeking employment 
in light vocations, where they will be able to wear fine clothes and to do 



220 DEPRESSION IN LABOR AND BUSINESS. 

little. There are probably many of that class unemployed. That kind 
of help is always abundant, and always has been, in my experience. 

Mr. Oowgtll. Yon think that the man who really wants employment^ 
and who is seeking 1 it, can have bat little difficulty in obtaining it? 

Mr. Stewart. Very little indeed. I do not think there is any sur- 
plus or over supply of manual muscle. 

The Chairman. You speak of there being money enough in circula- 
tion for the necessities of trade. Suppose there should be a large 
Increase of industries, would the present amount of currency be suffi- 
cient to meet that increase? 

Mr. Stewart. The amount of money required to transact the busi- 
ness of a country can always be obtained on what it has to offer for the 
money. Money is a commodity the same as merchandise is, and can be 
obtained in exchange the same as any other thing that is required. 
Money ought not to be fictitious ; it ought to be actual, and at the same 
value as that given for it. Our fictitious money, I presume, is what you. 
refer to? 

The Chairman. I refer to its purchasing power. 

Mr. Stewart. Its purchasing power depends solely on the faith re- 
posed by the people in its redemption. 

The Chairman. What is the amount of bank capital in this city ? 

Mr. Stewart. I cannot tell. 

The Chairman. If the business operations of this city were do ibled, 
would you not require an additional increase of currency to meet it, or 
have you enough currency on hand in any emergency ? 

Mr. Stewart. There is no such emergency likely to arise as far as 
there are any prospects discernible at present. If we should meet with 
another calamity such as we had before in the burning of our city, pro- 
bably we might require the same help as we then obtained. I do not 
quite comprehend your inquiry. 

The Chairman. You say that business is prosperous, and that yon 
have money enough to transact it. Suppose the amount of business 
should double or quadruple, would you then, with the capital you now 
have, be able to carry on the business successfully % 

Mr. StewArt. There is no probability that the business of this city 
or country would double or quadruple without the necessary enlarge- 
ment of the financial means to do it. 

The Chairman. Then you assume it as a proposition that the iudus- 
iries of this country throughout the Northwest are up to their full work- 
ing condition of supply % 

Mr. Stewart. I assume that we have abundant circulating medium 
for the transaction of all the business that we have or that we ever have 
had, or all that we are likely to have even with a very considerable in- 
crease. 

The Chairman. Is not the capacity for the production of cereals and 
manufactures throughout the Northwest liable to an increase over and 
above what it is now % 

Mr. Stewart. We are a growing country and our future is very 
great. 

The Chairman. If the products brought to your market were doubled 
or quadrupled, have you the money in circulation sufficient to carry on 
the business successfully which that increase would induce % 

Mr. Stewart. We do not need to provide ourselves for a long future. 
Our production of absolute money from the precious metals is continu- 
ing in a ratio probably equal to the expansion of our agriculture, and 
the want of money for the interchange of our commodities is not a like- 



DEPRESSION IN LABOR AND BUSINESS. 221 

lihood whatever. So long- as we can fabricate fictitious money which will 
pass at, the value of actual money on the faith of its redemption, it will 
always be current at par. 

The CHAIRMAN. Assuming that the circulation of this country is 
$700,000,000 (for that I believe is the amount in round numbers, in- 
cluding both legal-tenders and bank-note currency) do you regard that 
as a sufficient amount of currency for the convenience and accommoda- 
tion of the trade and commerce of fifty millions of people % 

Mr. Stewart. 1 can only judge of it from existing facts. The fact 
f is that we not only have an abundant but a superabundant supply of 
money. The rate at which money can be employed is so low as not to 
afford scarcely any risk whatever in its investment. One of the hin- 
drances (if anything can exist) to the prosperity of the country is that 
money is so abundant and so hw that nothing but the very best security 
can obtain it. If money were obtaining a fair remuneration for its use, 
people who are in want of it would easily obtain it. The redundancy 
of the currency is absolutely a hindrance to a renewed prosperity, if 
anything is hindering it. 

The Chairman. Then you have more money than you want ? 

Mr. Stewart. A good deal more of actual and fictitious money. We 
have about a hundred aud thirty-five millions of specie in the Treasury 
aud probably about six hundred millions of paper money in circulation. 
The fictitious money only floats at par on the faith of its redemption in 
coin. 

The Chairman. The trouble is that they will not let it out of the 
Treasury, but it is locked up there, over a hundred millions of it. 

Mr. Stewart. What do you mean by their not letting it out? 

The Chairman. Both greenbacks and gold have been locked up in 
the Treasury. 

Mr. Stewart. The only reason why currency floats at par is that the 
gold is in the Treasury. 

The Chairman. The allegation is that there is a large amount of legal 
tender locked up in the Treasury, and that it has been there for the last 
year. 

Mr. Dickey. Congress passed a law requiring the Secretary of the 
Treasury to keep greenbacks in circulation by payiug them out for the 
necessary expenses of the government and otherwise. The amount of 
legal-tender money then in circulation was three hundred and forty-six 
millions. Since the passage of that law a large amount of legal-tender 
money has been received in the Treasury, and has been kept there 
locked up, instead of being paid out, as required by law. 
, Mr. Stewart. I take it for granted that the Secretary of the Treas- 
ury is acting not only in compliance with law, but in compliance with 
the best interests of the Treasury in the execution of the resumption 
act. I do not suppose that there is any purpose for which the Secretary 
of the Treasury can pay out that money legally any faster than he does. 
He pays it out, I suppose, on the requirements of the various departments, 
and I do not know how else he can pay it out. 

The Chairman. I do not know how that may be. Congress last 
year appropriated some two hundred and sixty-seven millions of dollars 
to be paid out of the Treasury. If all the legal-tender money was out 
and in circulation it might be said that there was currency enough, but 
as I understand it, the whole amount of the legal-tender currency is not 
afloat. 

Mr. Stewart. That is only a proof that it is not required. If that 
amount is held in reserve in the Treasury, and if every bank in the 



222 DEPRESSION IN LABOR AND BUSINESS 

country is loaded down with paper currency, is not that a proof that 
the people do not require the money or that they have nothing to give 
for it. I do not understand why it should be in circulation if there is 
no want for it. 

The Chairman. You would naturally suppose that the appropria- 
tion of such vast sums would take as much money as there is in the 
Treasury. 

Mr. Stewart. I am not familiar with the modus operandi by which 
money gets out of the Treasury. 

The Chairman. You are a business man of large experience and 
skill. How can you recoucile the idea that twelve or fifteen dollars per 
capita is enough to accommodate the trade aud business of this country,, 
when it requires four times that amount to do so in France, where the 
circulation is $55 per capita % 

Mr. Stewart. I had always supposed the French people to be a 
very economical, thrifty people, and I had no idea that they lived at 
such an extravagant fate as you say. I do not know anything about 
what the people in France do. I have heard about what the people of 
Great Britain do, and they seem to be able to get along and live at a 
more liberal rate than the people of France are supposed to do, and yet 
at the same time they have no such amount of currency. 

The Chairman, They have $21 per capita in England, $55 in France,, 
and $15 in the United States. 

Mr. Stewart. I am afraid you are theorizing. I can only speak from 
actual facts. We know that we have got more currency than we want. 
We cannot use it ; we are loaded down with it. If I do not choose to 
live at the rate of more than $1,000 a year, it is none of my business if 
somebody else is living at the rate of $50,000 a year. 

The Chairman. Would it not be politic to reduce the amount of 
currency % 

Mr. Stewart. I think it would be politic to reduce this fictitious 
money. It has a value only in proportion to the prospects of redemption. 
Its redemption is now assured, and hence it is at par. Just in propor- 
tion as the prospects of its redemption advanced to a surety, it ap- 
proached par. 

The Chairman. What percentage of currency have we in excess of 
our demand? 

Mr. Stewart. I have not figured it out. I know that we have more 
than we want. I know that capital is going a begging, and wherever 
it can find available security it is loaned at very low rates of interest, 
rates that are unprecedented, unheard of. Money was actually lower 
in this country last spring than it was in Great Britain or France. 

The Chairman. Then you think it would be wise to contract the 
volume of currency % 

Mr. Stewart. I do — the volume of our paper money, and to let out 
our actual money. I would let the actual money get into circulation. 
Gold is a commodity, the same as any other article. The products of 
the mines, farms, fisheries, or anything else, have a current value, and 
that value is simply that at which one will exchange for the other. 
This paper money had no value except the prospects of being able at 
some time to buy this other money or commodity at the same rate. 

The Chairman. Does not the credit of the Government of the United 
States give paper money more than a fictitious value 1 

Mr. Stewart. The credit of the United States is what inspired faith; 
in the ultimate redemption of this paper money. 

The Chairman. You speak of it as having a fictitious value ? 



DEPRESSION IN LABOR AND BUSINESS. 223 

Mr. Stewart. Of coarse it has do value. 

The Chairman. I do Dot speak of what the paper is worth per bale. 

Mr. Stewart. But that is precisely its value. 

Mr. O'Connor. Suppose that the government had not a dollar of coin 
ia its vaults, do you mean to say that legal-tender notes would be worth 
nothing ? 

Mr. Stewart. I do not mean to say that they would be worth noth- 
ing. They would be worth just what the people believed they would be 
worth at the time they would be paid. It depends npon their quantity. 
The more you give out the lower they go. The more you water the vol- 
ume of currency the poorer it is. 

Mr. O'Connor. You do not doubt that the legal tender currency of the 
country woulcl have a value if there wasn't a single dollar of specie in 
the vaults of the Treasury to redeem it with J ? 

Mr. Stewart. I do not deny that it would have some value. There 
was very little specie in the vaults of the Treasury for a long time, and 
then the paper money was very much" depressed. * 

The Chairman. What effect do you think the passage of the specie 
resumption act has had on the business of the country ? 

Mr. Stewart. The passage of the specie resumption act which hap- 
pened in 1875, to take effect in 1879, was simply a reassurance that we 
would come to a position where we knew exactly what we were dealing 
in. 

The Chairman. Fixing a new starting point ! 

Mr. Stewart. Yes; and fixing an immutable measure of. values. 

The Chairman. Has that act operated favorably on trade here ? 

Mr. Stewart. Not immediately, because in anticipation of it a great 
adjustment had taken place in values so as to comply with w r hat was 
anticipated would actually take place. 

The Chairman. Is specie resumption regarded here as a fixed fact % 

Mr. Stewart. It is. 

The Chairman. Is the law carried out in any of its features ? Do 
business men present paper money at banks and receive coin for it ? 
Suppose you want to convert $20,000 of legal-tender notes into gold, is 
there gold enough in the city of Chicago to meet that demand ? 

Mr. Stewart. Yes ; there would be no difficulty in getting it. 

The Chairman. Since when ? 

Mr. Stewart. Since the first of January. You caD get it at any time 
iD the sub-treasury. 

The Chairman. Have you had occasion to convert paper into gold at 
any time since the 1st of January ? 

Mr. Stewart. Yes; I have sent to the sub-treasury and got gold. 

The Chairman. Did you ever obtain gold from a bank ? 

Mr. Stewart. No, sir ; our national banks are not under the neces- 
sity of carrying gold. It is one of the singular features of the resump- 
tion act that the banks can redeem in greenbacks, but the greenbacks 
are redeemable in gold. 

The Chairman. What is the extent of the resumption law as you un- 
derstand it ? Does it apply only as between the government and de- 
positors 

Mr. Stewart. It is a little indirect, as I understand it. A bank on 
presentation of its emitted bills would in all probability redeem them in 
United States legal-tender notes. We have a legal-tender currency still 
imposed upon us by law. 

The Chairman. If the bank had not legal tenders, would it pay in 
gold on demand ? 



224 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Stewart. I have no doubt it would. 

The Chairman. Have the banks the gold to do so ? 

Mr. Stewart. They would have it. If they had not got it, they would 
prepare themselves with it. One of the strange features of the resump- 
tion act is the continuing in circulation this paper of the government 
which is a legal tender yet. When it is redeemed by the government, 
it is simply a roundabout way of obtaining the specie itself. 

The Chairman. When you say that any man can procure employment 
here who has a disposition to work, do you speak from persoual knowl- 
edge of that fact, or do you gather it from information derived from 
those with whom you associate ? 

Mr. Stewart. To some extent from my own knowledge and from my 
own observation. I find that my men are being sometimes offered bet- 
ter inducements elsewhere. For the last two years no man has had any 
complaint to make that he could not ask for an advance of pay. Now 
I find that some of my men find opportunities to get better positions. 

The Chairman. You speak from the demand for labor in your own line 
of business, not with reference to other industries in the city? 

Mr. Stewart. lean only speak from my own observation. 

Mr. Dickey. You speak of a recovery from depression in business ; 
do you confine yourself to Chicago, or do you mean it to apply to the 
whole country? 

Mr. Stewart. My acquaintance does not extend over the whole coun- 
try. I speak more particularly of the Northwest. 

Mr. Dickey. Explain to the committee how you account for this re- 
covery from the depressio n which formerly existed. What has brought 
about the recovery? 

Mr. Stewart. The causes of the depression were probably, as I said 
before, the inflation of the 'currency and speculation, and the industries 
growing out of that speculation, one of which was the vast extension of 
railroad improvements. On the explosion of the bubble of speculation in 
1873, a good many hundreds and thousands of people w r ere thrown out of 
employment, directly or indirectly, from the cessation of railroad improve- 
ment; and I attribute the increasing improvement from the depression 
caused by that to a readjustment of the labor of the couutry. Those 
who were employed in all those avocations have found new fields of 
labor, particularly in the West and Northwest. Our Territories are fill- 
ing up. That outlet has relieved the community where these people 
were previously employed in the different kinds of business that were 
suspended by the panic. 

Mr. Dickey. Then you regard the readjustment of the labor system 
and of the business system of the country as the cause of the improve- 
ment in business? 

Mr. Stewart. Y r es, sir. 

Mr. Dickey. Do you attribute any of the improvement in the busi- 
ness and labor of the country to legislation? Has the legislation of the 
country affected in any wa,v the business so as to improve it ? 

Mr. Stewart. I do not think that legislators have done much for it. 

The Chairman. Legislation gave you the whole greenback currency. 

Mr. Stewart. And the redundancy of it was the cause of the diffi- 
culty. 

Mr. Dickey. Was it not legislation that gave the redundancy of cur- 
rency ? 

Mr. Stewart. Yes, sir. 

Mr. Dickey. Do you not think that legislation has in some way or 
other contributed to the recovery from this depression and redundancy ? 



DEPRESSION IN LABOR AND BUSINESS. 225 

Mr. Stewart. I am Dot aware of it in any way except so far as I look 
forward to a correction of the redundancy of the currency, that is, by the 
resumption of specie payments. 

Mr. Dickey. Then the resumption act was valuable 1 

Mr. Stewart. Yes. That was only a correction of previous legisla- 
tion. 

Mr. Dickey. Had the renionetizatiou of silver anything- to do with 
the improvement ? 

Mr. Stewart. No, sir ; I think not. 

Mr. Dickey, Are you a bi-mefallist or a mouo-metallist, or are you in 
favor of a whole metallic system ? Do you thiuk that the money ought 
to be all gold and silver? 

Mr. Stewart. No, sir; r I am in favor of just as much paper money 
as can be redeemed. 

Mr. Dickey. Would you have paper money issued by the govern- 
ment ? 

Mr. Stewart. No, sir; I thiuk that when paper money is issued by 
the governm ut there is too much temptation to tamper with it. What 
the people of the country need is assurance of permauency in its measure 
of values. 

Mr. Dickey. What can give that assurance ? In what body of men 
would you place the power to issue money in order that the people 
should have that assurance? Would you put it in corporations or in 
Congress, or where would you rest this power to issue paper money ? 

Mr. Stewart. That I am not prepared to answer. 

Mr. Dickey. The power would have to rest somewhere would it not? 

Mr. Stewart. Yes. Refereuce has. been made here to France, and I 
simply wish to state that every paper dollar emitted by the Bank of 
France has a dollar of specie behind it to redeem it. That is the circu- 
lation that I would have. 

Mr. Dickky. You would have dollar for dollar in the vaults of the 
Treasury to redeem every paper dollar issued. 

Mr. Stewart. Yes; I would. 

Mr. O'Connor. There has been a decline in the business and labor of 
this city. 

Mr. Stewart. Yes. 

Mr. O'Connor. When did that decline set in ? 

Mr. Stewart. It set in here on the explosion which I mentioned in 
1873 — usually called a panic. 

Mr. O'Connor. There were uo symptoms of it before that? 

Mr. Stewart. O, there were, of course. The patient, inebriated for 
ten years, had become a little sick, and of course when the final explosion 
came it was simply the culmination of the sickness. There was a reti- 
cence on the part of business meu as to becoming engaged in future opera- 
tions based on the then existing values. 

Mr. O'Connor. You say that the commencement of the deciiue in busi- 
ness and prosperity in Chicago was in 1873, when the panic broke out? 

Mr. Stewart. Y r es. 

Mr. O'Connor. Did that decline go on increasing ? 

Mr. Stewart. We are a growing country, and I do not think there 
was auy great decline in the volume of busiuess. 

. Mr. O'Connor. Was there not a constant down-grade in prices from 
that time to 1878? 

Mr. Stewart. Yes; I think there was a nominal depreciation in 
prices from that time to 1878. If our volume of currency be in the 
neighborhood of seven hundred millions, that seven hundred millions 
H. Mis. 5 -15 



226 DEPRESSION IN LABOR AND BUSINESS. 

will measure more than double the amount in materials or in railroads 
that it would measure at the time the explosion took place. Hence it 
is equal to a fourteen hundred million dollar currency at this time. 

Mr. O'Connor. That is your idea ? 

Mr. Stewart. Yes ; I know it in my line of business. Money has ap- 
preciated to that extent. 

Mr. O'Connor. And the value of property has depreciated to that ex- 
tent % 

Mr. Stewart. O, no ; it has been simply an appreciation of the money. 
Our values are now similar to what they are in other countries. We 
were floating along on fictitious values. 

Mr. O'Connor. But there is no doubt that the prices of property have 
been going down as the value of money has been going up. If on the 
1st of January, 1873, you owned a house in the city of Chicago that was 
worth $50,000, and if on the 1st of January, 1877, that house was worth 
only $20,000, you would not think yourself as rich in 1877 as you had 
been in 1873 1 

Mr. Stewart. It 1 own the house I have the same property. 

Mr. O'Connor. Suppose that you had ou that house a mortgage for 
half its value, say $25,000, and that on the 1st of January, 1877, that 
property, in consequence of the depreciation of values and of the appre- 
ciation of money, was worth $5,000 less thau the amount of the mort- 
gage, would you still say that you are as rich in 1877 as you had been 
in 1873 ? 

Mr. Stewart. I would be sorry for the mortgagee,- he would be in a 
bad fix. If this committee is laboring under the impression that values 
are fixed, it will probably find out its mistake. There is a continual 
change. That which is is only the thing that is not likely to be. The 
fluctuation of values is one of the elements of all wealth except the 
precious metals themselves; for gold, of course, is the standard of all 
else. 

Mr. O'Connor. Do you think that it is the duty of the government to 
legislate such changes of values in the interest of one class and to the 
ruin of another class? 

Mr. Stewart. Certainly not. I do not think that it is the business 
of government to legislate for the interest of any one class to the injury 
of any other class. 

Mr" O'Connor. On the 1st of June, 1866, we had seventeen hundred 
or eighteen millions of paper money afloat in this country, and the 
prices of all property were graduated according to the amount of that 
circulation. Do you think it a wise and reasonable and just act on the 
part of the government to reduce by legislation that volume of circu- 
lation by two thirds, thereby impairing the value of all property by two- 
thirds f 

Mr. Stewart. That question is probably not entirely ingenuous. 

Mr. O'Connor. I mean it to be so if it is not. 

Mr. Stewart. The government in a great emergency, doing what it 
undoubtedly considered to be necessary for its salvation and for the pro- 
tection of the whole property, as well as of the lives of the people, leg- 
islated by making a paper currency. It emitted it in very large volumes. 
It emitted it until its value was not more than forty cents on the dollar. 
The value of property, of course, gradually appreciated ; that is, it ad- 
justed itself to a 40 cent dollar. It did not stop when the depreciation 
of the dollar stopped. And when its recovery commenced the specula- 
tion in property did not cease but kept on and increased. It was set in 
motion by this inflation, and it kept on, not till the close of 1873, but 



DEPRESSION IX LABOR AND BUSINESS. 227 

certainly till the close of 1872 — a year previous to the panic. Then val- 
ues fell about 50 per cent. They had increased from 1861 to 1872 far 
more than at that rate. We had not got back to onr normal condition 
in 1873, nor had we got back to it until probably 1878, wheu the ap- 
proach of specie payment was assured. That is the only thing that 
brought us back to our normal condition. 

Mr. O'Connor. Do you not think that the business of the country 
could have grown up and maintained a perfect stability until the cur- 
rency had gradually come to a par in gold, without the contraction of 
the currency which took place ! 

Mr. Stewart. There was very little contraction of the currency. 
Though you speak of a volume of seventeen hundred millions in I860 
I am not aware of any such amount of currency. The limit of legal 
tender currency was four hundred millions, and we have still three hun- 
dred and forty-six millions of it. I am assured that we have more cur- 
rency in proportion to our values and to our business wants to-day than 
we ever had before. There was no time between 1801 and 1879 wheu 
money could be obtained at such low rates as since the 1st of January, 
1879/ 

Mr. O'Connor. Money has become so dear, that instead of money 
buying property, property has to buy money. The functions of money 
have been reversed. Money has become very dear, and everything else 
has become very cheap. In Mr. Sherman's Mansfield speech, several 
years ago. he set down the various issues of currency (including the 5 
per cent, compound interest notes, the 7-30 notes, and all other notes), 
exclusive of the bonded debt, at seventeen hundred or eighteen hundred 
millions. The circulation is. to-day about seven hundred millions. At 
the period when seventeen hundred or eighteen millions of currency were 
afloat, of course all prices were adjusted according to that basis of cir- 
culation. What I want to ask you is this : whether, under a wise policy 
the business of the country could not have grown and expanded so as 
to maintain that amount of currency afloat, and whether that currency 
would not have gradually advanced to par with gold without any cou- 
traction ! 

Mr. Stewart. It might in the course of the next generation or two. 
However, I will state, as a business man, that for the best interests of 
the people, there never was probably a wiser act than the resumption 
act, long as it was delayed, and greatly as the national honor had suf- 
fered by the delay. The value of the currency was fluctuating every 
day and every hour of the day. The people who had anything to sell 
were taxed to the extreme limit of the fluctuations against them — not 
only as against our exports to foreign countries, but as against our deal- 
ing among ourselves. Every transaction was taxed in duplicate. One 
of the greatest curses that the country ever had or ever can have, 
was that fluctuating currency. Xo evil ever was inflicted on the people 
equal to the evil of that fluctuating currency. It has made my hair pre- 
maturely gray. 

The Chatrwan. It has not impaired your mind any ? 

Mr. Stewart. I have had to suffer from it many restless nights, be- 
cause it involved issues that were always vital to me and my business. 

Mr. ? Connor. TTas not the greenback constantly appreciating in 
value from the close of the war down to 1875. when the resumption act 
was passed, except at the time of the corner in gold made by Fisk, in 
1869 ! 

Mr. Stewart. Xo, sir; it fluctuated perpetually. 



228 DEPRESSION IN LABOR AND BUSINESS. 

Mr. O'Connor. Was not gold selling at 109 on the very day that the 
resumption act was passed? 

Mr. Stewart. Gold was selling, probably, at about 109. In 1873, 
however, it was selling at 106. In ;870 it was welling at 109, It was 
nearly 120 during the Franco-Prussian war. We were subject to those 
fluctuations. It did not recede for a year to where it had previously 
been. It was constantly fluctuating. There were probably not two 
consecutive days on which it opened and closed exactly the same. That 
was a curse to the people. The object of legislation should be to en- 
courage thrift, industry, virtue, intelligence, and co'nfort among the peo- 
ple. It should not be to encourage gambling, speculation, and vice. The 
social extravagance engendered by inflation had a large share in caus- 
ing the panic. We had spent enormously on foreign fabrics and on 
other luxuries, which we latterly could uot do. Hence we found our- 
selves in an unenviable condition. Whathas«tbe resumption act brought 
about? It has brought about a degree of industry never witnessed 
among any people. By our exports we have redeemed a large part of 
that which in our inebriated condition we frittered away. 

Mr. O'Connor, At what time did this recovery in the prosperity of 
Chicago begin to take place ? 

Mr. Stewart. We have been gradually recovering for nearly a year. 

Mr. O'Connor. Since the passage of the act for the remonetization of 
silver? 

Mr. Stewart. Yes; it has been principally since resumption itself 
has become an established fact — since the operation of the act on the 1st 
of January, 1879. 

Mr. O'Connor. Not prior to that 1 

Mr. Stewart. We remained in a state of uncertainty. Resumption 
was not \et an assured fact, and hence'the uncertainty aud suspense 
kept us in a depressed condition. 

Mr. O'Connor. Has not the decline that existed in the prosperity of 
Chicago checked the course of immigration which had been pouringinto 
your citv iu previous years (say from 1860 to 1870). Has not the rate of 
immigration for the last ten years been much less than for the preceding 
ten years ? 

Mr. Stewart. Possibly that has been so. 

Mr. O'Connor. Do you not know that that is a fact ? 

Mr. Stewart. Yes ; I know that the whole country received fewer 
immigrants within the last ten years than it had done during the time 
when we were borrowing money from all the world and spending it so 
liberally. Of course many came here to get a share of it. 

Mr. O'Connor. Are there as many men out of employment now as 
there were in that flush era which you call the era of extravagance? 

Mr. Stewart. I do not think that there are any more unemployed. 
I think that probably many have resumed labor who were then engaged 
in speculation, in living by their wits. I think that many of them have 
returned to honest industry. 

Mr. O'Connor. You do not think that there are more men out of em- 
ployment now than there were between 18(50 and 1870? 

Mr. Stewart. 1 do not think there are many more. Our industrious 
population is rapidly getting into line of work. There are not a great 
many unemployed people in the Northwest now. I know that there is 
a demand for labor at the present time m agricultural pursuits that can- 
not be supplied. 

Mr. O'Connor. You are giving your statement from your experience 
as a citizen of Chicago % 



DEPRESSION IN LABOR AND BUSINESS. 229 

Mr. Stewart. Yes. • 

Mr. O'Connor. Have you ever seen the southern section of the coun- 
try? 

Mr. Stewart. I have. 

Mr. O'Connor. Have you been there within the last seven or eight 
years I 

Mr. Stewart. Yes ; I have been there two or three years ago. I used 
to go every year to the South, to New Orleans. 

Mr. O'Connor. Did you find things prosperous in the South when 
you were last there ? 

Mr. Stewart. No, sir. 

Mr. O'Connor. Have you been to the East? 

Mr. Stewart. Yes. 

Mr. O'Connor. Did you find things prosperous there ? 

Mr. Stewart. I did not think they were in a state of starvation. 

Mr. O'Connor. Did you not hear among the merchants of New York 
the cry of " hard times," some years since 1 

Mr. Stewart. Yes; they used to complain. 

Mr. O'Connor. Aud you heard the same cry in Boston and Philadel- 
phia 1 

Mr. Stewart. Yes ; but you know that it is the privilege of^ree 
speech to grumble. 

The Chairman. You found the East in a flourishing condition as re- 
spects its cotton and woolen manufactures, but you found prices from 
50 to 75 per cent, lower than they ever were before. 

Mr. Stewart. Yes; they have come back to nearly normal prices. 
Whan gave an imnetus to a return to employment of our idle indus- 
tries was an outlet for our products and at such prices as that other peo- 
ple would take them. We had got to come in competition with other 
nations. 

The Chairman. Did the prices of your commodities here come down 
correspondingly with the prices of commodities at the East ? 

Mr. Stewart. I do not know. It depends upon what basis of come 
down or go up you take. There is no established rate that you cau put 
on anything as a criterion. 

The Chairman. You know that in Lowell and Lawrence, and in other 
great cotton aud woolen manufacturing towns of Massachusetts, they 
are making goods now at much less price than ever before ? 

Mr. Stewart. Yes. 

The Chairman. Has there been a corresponding fall in prices of the 
commodities which the West sells to them ? 

Mr. Stewart. No, sir ; they are low, but not lower than ever before. 

Mr. Sherwin. Now, as to bank accommodation. It has been stated 
here that it is impossible to get accommodation at the banks of this city 
without putting up collaterals greatly in excess in value of the amount 
to be borrowed. I would like to know what your observation is in re- 
gard to that ? 

Mr. Stewart. There is no greater difficulty now than there has al- 
ways been at the banks. The banks have always exercised a good deal 
of discretion and care in the discount of paper. They necessarily have 
to do so. AD that they get is the piece of paper with the inscription. 
Paper with two good names on it can be discounted here to-day at 5 per 
cent. 

The Chairman. You can get all you want on your own name, I sup- 
pose ? 

Mr. Stewart. No, sir; because the banks have a rule requiring two 



230 DEPRESSION IN LABOR AND BUSINESS. 

names. Private banks discount paper with single names, but the na- 
tional banks are not permitted to do so. I can get all the money I want 
at 4^ per cent. 

Mr. Sherwin. How large an area does your trade extend over in the 
West ? 

Mr. Stewart. From Salt Lake to the middle of Michigan and down 
to the middle of Indiana. It does not extend much into Texas. It covers 
a large area. 

Mr. Sherwin. All the Northwest and some of the Southwest? 

Mr. Stewart. Yes. 

Mr. Sherwin. From your knowledge derived from dealing with your 
customers through that area, what is their condition compared with a 
year ago? 

Mr. Stewart. The condition of the trade in the Northwest is much 
healthier, and one of the reasons is the abolition of the bankrupt act, 
which was simply a temptation to dishonesty and fraud. The abolition 
of that act was wise legislation. We have but very few failures, and 
we can rest with a good deal more sense of security in our accounts 
than we have been able to do at any time since 1872. 

The Chairman. Are you a native-born citizen 1 

M& Stewart. No, sir; I am a Scotchman. 

Mr. Martin. You think that the repeal of the bankrupt act has beeu 
beneficial to the business interests of the country? 

Mr. Stewart. Yes; I think that a bankrupt act would be a good 
thing; but a bankrupt act which stood simply as a temptation to dishon- 
esty and fraud was a very bad thing. A bankrupt act framed for the 
real good of honest debtors would be a good thing. But that act was a 
villainous aid to fraud. 

Mr. Martin. A good many people were better off when they came 
out of bankruptcy than they were when they went in ? 

Mr. Stewart. Yes. 

Yieios of Mr. 0. W. Potter. 

Mr. O. W. Potter came before the committee at its invitation. He 
said in reply to preliminary questions: I am connected with the North 
Chicago Rolling Mill Company, which is engaged in the manufacture of 
iron and steel; I live in this city; our business is connected wholly with 
the West and Northwest. 

Mr. Cowgtll. What number of men are employed in that company? 

Mr. Potter. We have about 4,000 employed under the corporation. 

Mr. Cowgill. What are the facts about there being any depression 
in the business of the country at this time, in your judgment, and if 
there is any depression, what caused it, and if you know any remedy for 
it you will also state it? 

Mr. Potter. So far as depression in our business is concerned, we 
never have been as busy since we were a corporation as we are now. 

Mr. Cowgill. State the extent of your business. 

Mr Potter. For our fiscal year ending the 1st of July last the busi- 
ness was nearly six and a half million dollars. In volume of business 
we have never had so much to do as we have now. 

Mr. Cowgill. How is it as to your business being remunerative as 
compared with former times? 

Mr. Potter. The margin of profits is smaller, but the volume of busi- 
ness is larger. 

Mr. Cowgill. Is the volume sufficiently large to equal the profits of 
your business when you had a better profit on what you did ? 



DEPRESSION IN LABOR AND BUSINESS. 231 

Mr. Potter. No, sir; but the margin of profits is reasonably satisfac- 
tory. Bat the condition of things which exists to-day cannot prevail 
much longer, because the low prices of labor and of raw material will 
not contiune. There will be an appreciation of those prices within the 
next twelve months. 

Mr. Cowgtll. What is the fact about there being a lack of employ- 
ment for the laboring classes of the country f 

Mr. Potter. So far as we are concerned, we are having some diffi- 
culty in getting men enough to do the work which we have to offer 
them. 

Mr. Coavgill. Is it skilled labor that you have difficulty in procuring 
or is it common labor? 

Mr. Potter. Our greatest difficulty is iu getting the common labor. 

Mr. Cottg-ill. What difficulty is there, so far as you know, in com- 
manding sufficient money to do the business of the country ? 

Mr. Potter. Just now there does not seem to be a lack of sufficient 
money to do the business, so far as we are concerned. 

Mr. Cowgtll. Do you know of any business where there is any pru- 
dent investment being made, or any business which the requirements of 
the country demand, where there is not a sufficient amount cf money 
to carry it on ? 

Mr. Potter. We have had no such experience, and I know of none. 
Men who are managing their business economically, and whose own 
habits are economical and conservative and prudent, can get all the 
money they want to conduct their business. 

Mr. Cowgill. If you think of anything else which you desire to state, 
you may state it. 

Mr. Potter. I do not know that I have anything particular which I 
desire to say. In our own particular line of business we have had very 
strong competition. There has not been work enough to keep all the 
laboring men employed. The prices have been very low, and the wages 
of labor have been reduced correspondingly. They are reduced now to 
that point that, with the increase of business, the laborers have got to be 
paid more wages. It is clear in our own department now, that our labor- 
ers not only ought to get more, but that our business will have to be so 
managed that we can give them more. There must be an appreciation 
of prices. We feel that the laboring classes iu our own particular branch 
of business have been, for the last two years, reduced to the lowest pos- 
sible ebb at which men can live, and that it is our duty as employers to 
see to it that they get better pay from this time forward, if our business 
can warrant it. 

Mr. Oowg-ill. What, in your judgment, is the prospect that the busi- 
ness of the country will warrant an increase of wages iu common labor ? 

Mr. Potter. I think there is everything to indicate that the common 
laborer can be, and ought to be, better paid, and that the business and 
general condition of the country will warrant it. 

Mr. Cowg-ill. Is it not a tact that the increase of business, the de- 
mand for the various kinds of manufacture and of productions of all 
kinds, is such that it will create competition for that kind of labor, which 
competition must unquestionably increase the price paid to the laborer"? 

Mr. Potter. I think so. 

Mr. OowGriLL. In your judgment, can the condition of the country in 
regard to those things that we have been talking about be benefited by 
any legislation that you think of? Do you think that Congress can en- 
act any law that would bring more prosperity, that would give more 
life to business and more employment to labor % 



232 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Potter. I thiuk that one great evil which we have had to meet 
in the last four or five years has been the extensive credit system 
on which business has been done. Men have been overtrading and liv- 
ing beyond their means. I think we are now coming to that point that 
a man having $25 a month will learn to live on $23, and a man having 
$1,000 a year will learn to live on $900 a year, and a man having $5,000 
a year will not spend $7,000. That has not been so in the past. I be- 
lieve that a majority of the people in this country have been living be- 
yond their means. I think that the repeal of the bankrupt law will make 
a great difference. I think that with all classes learning to live within 
their means, we will not be troubled so much as we have been about 
hard times. There has been an era of extravagance which we are get- 
ting out of. 

Mr. Cowoill. Do you think that any law which Congress will pass 
will benefit the condition of the country i 

Mr. Potter. So far as our own particular business and those collat- 
eral to it are concerned, I do not see that Congress can enact any law 
which will make any difference to us. Business is going on appreciating 
constantly. There seems to have been a better condition of things in- 
augurated, and, in my judgment, that condition will continue. 

Mr. Cowgill. If you think of anything else we would be glad to hear 
your views upon it. 

Mr. Potter. I feel that one thing has been wrong in this country, 
and that is our immigration laws, which throw the doors open wide to 
receive the paupers and criminals from other countries to au extent 
which has made a great deal of trouble in this country. I think it is 
time that Congress should draw the liDe somewhere in regard to immi- 
gration to this country. I believe that criminals and paupers should 
be kept in their own countries, and, that if any discrimination is possi- 
ble, it should be in the direction of favoring the immigration of those 
who can earn their own living. Another thing that is wrong is toallow 
prison convict labor to come in competition with other classes of labor. 
The idea of allowing a man to contract for prison labor at 25 cents and 
30 cents a day and to compel honest men to compete with that kind of 
labor is perfectly infamous. 

Mr. Dickey. Congress did pass a law restricting the immigration of 
Chinese to this country, but that law was veto d by the President. 
Have you ever given any attention to the question of Chinese immi- 
gration % 

Mr. Potter. Very little, except that I think that the President did 
right in vetoing that bill. Still I think that a law ought to be passed 
to prevent Chinese immigration to this country. 

Mr. O'Connor. On what ground do you justify the veto of the Chi- 
nese immigration bill ? 

Mr. Potter. On the ground of the Burliugame treaty. I thought 
the act a violation of the treaty stipulations, and I thought the Presi 
dent did right in vetoing it. Still, I think that Chinese immigration 
should be prohibited. 

Mr. Martin. If there was no treaty on the subject, would you then 
justify the President in vetoiug that act? 

Mr. Potter. No, sir ; I should say that he ought not to veto any law 
thpt Congress would enact prohibiting the immigration of Chinese here. 

The Chairman. In the employment of men in your works, do you 
require more hours of labor at your present rates of wages than you did 
before ? 

Mr. Potter. No, sir; the hours of labor sre the same that they have 



DEPRESSION IN LABOR AND BUSINESS. 233 

always been. A good deal of our work, however, is piecework — ton 
work. 

The Chairman. Are your rails made by tbe tou ? 

Mr. Potter. Yes, very largely; I should think that seven-tenths of 
our men are on piecework. 

The Chairman. Had you previously worked by the piece ? 

Mr. Potter. Yes, so much a ton. 

The Chairman. What are rails worth at your establishment? 

Mr. Potter. Steel rails are worth $45 a ton. 

The Chairman. And iron rails? 

Mr. Potter. About $38. 

The Chairman. Where is your market for them ? 

Mr. Potter. Entirely in the West and Northwest. 

The Chairman. None of them go East? 

Mr. Potter. No, sir. 

The Chairman. What is your pig-iron worth ? 

Mr. Potter. Pig-iron for Bessemer steel purposes is worth from $22 
to $24 a ton. 

The Chairman. That is for steel rails ? 

Mr. Potter. Yes. 

The Chairman. Is it made from charcoal or from bituminous fuel ? 

Mr. Potter. From both. 

The Chairman. Which kind commands the best price ? 

Mr. Potter. There is but very little difference. We should discrimi- 
nate in favor of charcoal metal if made from the same ores. It is prin- 
cipally made from Lake Superior ores. 

The Chairman. Do you buy none of your commodities from Pennsyl- 
vania? 

Mr. Potter. Very little. 

The Chairman. In your opinion, is there currency enough to dis- 
charge all the necessities and wants of your trade? 

Mr. Potter. Yes, sir. 

The Chairman. You would not have any more money added to the 
currency ? 

Mr. Potter. We have no difficulty in getting all we want. 

The Chairman. If you should become more prosperous, would you re- 
quire any more circulation ? 

Mr. Potter. I do not know that I can answer that question. We 
have the money to meet all our requirements. 

The Chairman. Do you buy for cash ? 

Mr. Potter. Yes. 

The Chairman. Do you call it thirty days? 

Mr. Potter. No. 

The Chairman. Do you sell for cash ? 

Mr. Potter. Yes ; whatever products we sell in one month are set- 
tled for on the 10th of the next month. 

The Chairman. Are there any other large iron mills about Chicago ? 

Mr. Potter. Yes ; there are three or four. There is one at Spring- 
field, one at Joliet, and two others in Chicago. 

The Chairman. Are they carried on as extensively as yours? 

Mr. Potter. Not to the same extent, but largely. 

The Chairman. You spoke of a very great depression of labor for four 
or five years back. 

Mr. Potter. Yes; there has been practically great depression. 

The Chairman. Do you think that the time has arrived when you are 
on a pretty safe basis of prosperity ? 



234 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Potter. Yes; it has that appearance to us. 

Mr. Sherwin. Have you any views to present on the question of 
eight hours ? 

Mr. Potter. I think that that question would cure itself so far as we 
are concerned ; I think that if the eight hour system were adopted our men 
would not get off their ton work to the extent that they do ; and I think 
that it would simply result in men being paid by the hour. So far as 
our men are concerned they would work ten hours a day. 

The Chairman. When they are paid by the piece I suppose they can 
work as many hours as they please ? 

Mr. Potter. No, sir ; if a man works two hours a day and then goes 
home, we should understand that our machinery should not stop. 

The Chairman. Suppose he wanted to work for twelve hours instead 
of ten 1 

Mr. Potter. That would not be practicable either, because we have 
an hour to begin work aud an hour to end. Some of our men may get 
through an hour or an hour and a half before others. There is a stipu- 
lated amount of work which they are to do when they work by the ton, 
which is called a day's work. 

The Chairman. Do they work in gangs! 

Mr. Potter. Yes ; so mauy rails are to be got off for a day's work. 

Mr. Sherwin. You think that if there was legislation making eight 
hours a day's work, that would not prohibit men from working more 
hours ? 

Mr. Potter. I think that the majority of men would work ten hours a 
day. * 

Mr. Sherwin. Because they would get more pay? 

Mr. Potter. I do not know any reason why men should not work 
ten hours instead of eight. 

Mr. Sherwin. For the same pay % 

Mr. Potter. I do not think you should pay a man the same price for 
eight hours as for ten. I do not think that the laboring classes are in 
the shape for that reduction. 

Mr. Sherwin. Could you manufacture profitably with eight hours' 
labor aud ten hours' pay ? 

Mr. Potter. No; it would result in a condition of things which would 
be pretty sure to make a good deal of trouble. 

Mr. Sherwin. What is the cause of the increased demand for the 
product of rolling mills ? 

Mr. Potter. In our particular case, and I think in that entire branch 
of the business, the cause of the increased demand is the change in the 
building of railways and the repairs that are goiug on. There is a great 
amount of railway building goiug on now. All the works in our line of 
business in the country have all the work that they can do. 

The Chairman. The railroads are substituting steel for iron, are they % 

Mr. Potter. We shall make more iron rails this year than we have 
made for the last four years, and we shall make more steel rails than 
ever before. 

The Ceairman. I thought that all new rails that were put down were 
steel. 

Mr. Potter. A good many engineers seem to advocate the policy of 
layingdown iron rails on new lines of railroad until the road-beds get set- 
tled, because the bed of a new road cannot be kept in good condition, and 
the rails will become twisted and bent and out of shape. The plan is 
to lay down iron rails at first and keep them down for four or five years 



DEPRESSION IN LABOR AND BUSINESS. 235 

until tbe road-bed gets settled and in better condition, and then to sub- 
stitute steel rails. 

The Chairman. Is the steel rail useless after it has been taken up? 

Mr. Potter. No, sir ; it isremelted and used to a large extent. 

The Chairman. Can it be used after twenty years' service f 

Mr. Potter. That depends upon the weight of the engine and the 
amount of tonnage passing over it. 

Mr. Sherwin. Is there an unusual extension of railroad building this 
year ! 

Mr. Potter. Yes, sir. 

Mr. Sherwin When did that revival commence? 

Mr. Potter. It began showing itself pretty plainly last year, and has 
shown itself this year to an extent that nobody had any idea of. 

Mr. Sherwin. Do you think that the resumption of specie payments 
has had anything to do in retarding business? 

Mr. Potter. Not at all. I think the effect of it has been to settle this 
currency question so that men have felt that they knew what the cur- 
rency was. 

Mr. 8herwtn. Then you would say that the resumption act was 
beneficial in that regard ? 

Mr. Potter. I certainly think so. I cannot think that the resumption 
of specie payment has been an injury to the prosperity of the country 
since resumption began, but I believe that it has been a benefit by reason 
of its settling values, and because people have known since then what 
they were about. 

The Chairman. As regards practical results, do«you not consider the 
resumption act a dead letter on the statute-book ?'• 

Mr. Potter. No, sir.; J do not. 

The Chairman. In what way has it manifested itself so as to im- 
prove the condition of industries? 

Mr. Potter. Simply by the improving of them. 

The Chairman. What is the moving power of the improvement ? Is 
it that the resumption act is a kind of sheet anchor to business ? 

Mr. Potter. Yes, sir. 

The Chairman. It is not the conversion of paper into coin? 

Mr. Potter. No, sir. 

Mr. Dickey. There are a number of labor-unions in this city, are 
there not? 

Mr. Potter. I believe there are. 

Mr. Dickey. Do the men whom you employ belong to those unions, 
or are they men who have to leave the unions in order to get employment? 

Mr. Potter. I think they very largely belong to the unions. 

Mr. Dickey. How far from the city are your works situated? 

Mr. Potter. About three miles from this room. 

Mr. Dickey. Do these labor-unions here tend to better the condition 
of laboring men, or do they interfere with business and retard the welfare 
of the laboring men? 

Mr. Potter. I do not know that I can answer that question. I have 
felt opposed to trades unions until within a year or two, but I begin to 
doubt whether they may not be a benefit to us as a corporation. I do 
not believe that the trades-unions are any injury at all to our corpora- 
tion. 

Mr. Dickey. Are they an injury or benefit to the laboring men 
generally who belong to them ? 

Mr. Potter. I do not know that I can answer that question. 



236 DEPRESSION iN LABOR AND BUSINESS. 

Mr. O'Connor. What did you pay to your. heaters prior to the paniG 
of 1873 in proportion to what you pay them now ? 

Mr. Potter. I should think that we paid them then from 30 to 40 
per cent, more than now. 

Mr. O'Connor. The Joliet rolling-mills have had a collapse or failure, 
have they not? 

Mr. Potter. I believe so. 

Mr. O'Connor. What was the cause? 

Mr. Potter. I do not know, except very largely the system of credit 
which I spoke about awhile ago. 

Mr. O'Connor. When did that smash take place? 

Mr. Potter. I think in 1874 or 1875. 

Mr. O'Connor. That was a heavy crash. 

Mr. Potter. There was considerable money lost there, I believe. 

Mr. O'Connor. You said that you would favor the enactment of a 
law by Congress limiting immigration to this country. 

Mr. Potter. Discriminating; I would not say limiting. 

Mr. O'Connor. Would you legislate for the exclusion of all paupers, 
and keep a man out of this country just because he was poor 1 

Mr. Potter. No ; I do not know that I would say that. 

Mr. O'Connor. Yery few people come here unless they are poor. 

Mr. Potter. But it is the class of people that are not poor that we 
want to have come here, and who, I think, can be induced to come. Of 
course it is no crime in a man to be poor. There may be reasons why 
people are paupers on the other side, but I think there is no question 
that many of the idle and criminal classes on the other side have been 
sent here, and these people come in competition with our laboring 
classes here. I think that our government should take steps to dis- 
criminate against the immigration of the idle and criminal classes from 
abroad, and should not allow them to come here. 

Mr. O'Connor. It would be very difficult, however, for our govern- 
ment to establish any rule of discrimination. 

Mr. Potter. I think there could be a way found by which that un- 
desirable element of immigration can be kept out. 

Mr. O'Connor. Would you estimate the value of an immigrant by 
the amount of money he brought here ? 

Mr. Potter. No; but I think there can be evidence obtained from 
the other side in regard to the idle and criminal classes, and that it can 
be got from our consular officials there. 

Mr. O'Connor. Between 1875 and the 1st of January, 1879, during 
the period of our progress to resumption, and while we were marching 
on to the point of resumption, was there not a continual down grade in 
prices ? 

Mr. Potter. Yes, sir. 

Mr. O'Connor. And the back-set to that movement has taken place 
since we have got down to what is called hard pan % 

Mr. Potter. Yes. 

Views of Mr. Jesse Spalding. 

Mr. Jesse Spalding came before the committee in response to its 
invitation. He stated, in reply to preliminary questions: Mv business 
is lumbering; the establishments in which I am interested are in Me- 
nomonee, Wis., and Green Bay, Mich. We bring the lumber here, and 
market it from here throughout Iowa, Kansas, Nebraska, Missouri, Illi- 
nois, and Indiana. 



DEPRESSION IN LABOR AND BUSINESS. 237 

Mr. Sherwin. How many men do yon employ? 

Mr. Spalding. For about five months in the year we employ at the 
two places about 700 men. For the rest of the year we employ 350 or 
400 men. About 150 of them are employed here. 

Mr. Sherwin. State your opinion as to the condition of the lumber 
business. 

Mr. Spalding. There is more demand for lumber this last year than 
there was previously. The price is no higher. There has been a slight 
advance within the last ten days of perhaps 50 cents a thousand. Our 
shipments of lumber from this market to the various points mentioned 
were 70,000,000 feet greater from the 1st of July, 1878, to the 1st of July, 
1879, than for the preceding year. The demand for lumber has evi- 
dently increased. The condition of the people to whom we sell lumber 
throughout those states seems to be better. They are more prompt in 
their payments than they were last year or the year before, or any other 
year since the panic. 

Mr. Sherwin. Did you notice any marked effect upon your business 
from the operation of the resumption act? 

Mr. Spalding. The resumption act and the result of our last election 
declaring for honest money throughout the country seemed to restore 
confidence to the people throughout the northwest, so far as my obser- 
vation has gone. Both these causes seem to have had about an equal 
effect. 

Mr. Sherwin. Do you observe any dearth of money in circulation ? 

Mr. Spalding. I understand (although I only speak from an under- 
standing) that there is a surplus of money for over half the year, and 
that for the other half the year most of it is employed. I am informed 
by moneyed institutions that during the summer they have a large sur- 
plus on hand, which there is not a demand for. 

Mr. Sherwin. What would be your idea about the government inter- 
fering with the laws as they stand ? 

Mr. Spalding. 1 think that we have money enough, and I think that 
if Congress will let the currency question alone entirely for the next five 
years the prosperity of the country will increase more rapidly than it 
will if Congress keeps constantly tinkering with the currency. 

Mr. Sherwin.. Supposing' it should appear that a larger volume of 
currency was needed than exists at present, how would it be supplied? 

Mr. Spalding. The ways would be provided. At the time it was as- 
certained that more money was needed, I have no doubt that some pro- 
per way would be thought of by which money would be provided, with- 
out the intervention of the government. 

Mr. Sherwin. What is the condition of the laborers at present, so 
far as you have observed, in comparison with their condition in previous 
years ? 

Mr. Spalding. Until within the last two years, or perhaps the last 
year and a half, there has been a surplus of labor, and the laboring 
' classes throughout the country have suffered more or less. As the in- 
crease in prosperity and the increase in business have been goin^ on, 
there has been an increased demand for labor, so that I do not think 
there is now a surplus of labor in this city, nor in any locality with which 
I am at all familiar. 

Mr. Sherwin. Are there men seeking employment here who cannot 
find it? 

Mr. Spalding. I do not think there are now. The manufacturers 
generally (in the city and out, I think) have been for a part of the time 
last year short of laborers. There has been more demand for labor 



238 DEPRESSION IN L4BOR AND BUSINESS. 

than there has been supply. I do oot think that now, or at any 
time within the past six months (especially within the last three months), 
any laboring man who wants work cannot get it. I think there is de- 
mand for all honest labor that there is at present. For instance, we got 
short of labor at our mills in Wisconsin and Michigan, and for the first 
time since the panic we have had two applications within the last month 
from our superintendents there to send laboring men back on vessels 
that bring lumber here. We have had orders for 10, 15, or 25 men, and 
we were not able to send as many in either case as were ordered, for the 
reason that we could not find them. In one instauce we had to go to 
an emigrant train arriving here in order to get more men and send them. 

Mr. Sherwin. Was it wood-choppers that were wanted % 

Mr. Spalding. No; men to do the general work about a sawmill, 
carrying slabs, &c. 

Mr. Dickey. You advertised for men ? 

Mr. Spalding. We went to the different offices here where they fur- 
nish labor. 

Mr. Sherwin. I suppose you know something about the amouut of 
building that is going ou in this city at the present compared with pre- 
vious times? 

Mr. Spalding. There is considerably more building going ou at pres- 
ent than there was last year, and the prices of building materials, with 
the exception of lumber, are higher than they were last year. The price 
of labor is 10 or 12 per cent, higher. 

Mr. Sherwin. Have you ever had occasion to consider the eight-hour 
agitation \ 

Mr. Spalding. Yes ; my attention has been called to it often, and I 
have thought more or less about it. 

Mr. Sherwin. State your opinion on that question. 

Mr. Spalding. My opinion always has been that if the eight-hour 
rule ever becomes a law, it would soon regulate itself. My opinion is, 
that the honest laboring men of the country do not want such a law, 
and that neither the employer nor the employed would be as well off as 
they are now. What the practical result would be, 1 am unable to state. 

The Chairman stated that the testimony in Chicago was here closed, 
and the committee adjourned. 



TESTIMONY TAKEN AT SAN FBANCISCO. 
LAND MONOPOLY AND CHINESE IMMIGRATION. 

San Francisco, Cal., August 15, 1879. 
The committee met in the room of the surveyor of the port, in the 
San Francisco custom-house. Present, the Chairman (Mr. Wright), 
and Messrs. Dickey, O'Connor, Martin, and Cowgill. 

Views of Mr. T. B. Shannon. 

Mr. T. B. Shannon, collector of customs in the port of San Francisco, 
appeared before the committee in response to its invitation. 

The Chairman. We have come here with a view of ascertaining what 
effect Chinese immigration has on the industry and labor of the city of 
San Francisco. We wish to know how many Chinese there are on the 
Pacific slope, and what your opinion is in regard to the effect of Chinese 
immigration on industry and labor in this city and State. 



DEPRESSION IN LABOR AND BUSINESS. 239 

Mr. Shannon. The Treasury Department some time since asked me 
to report, to the best of my knowledge, the Dumber of Chinese in this 
country, and from all the information that I could obtain from the Chi- 
nese consul, and from the Chinese companies, from merchants and 
others, I reported as follows : 

Whole number of Chinese in the United States 96,430 

Whole number of Chinese in the Pacific States and Territories 67,000 

Whole number of Chinese in the Eastern States 29,430 

That is of course estimated, because of the impossibility of ascertain- 
ing the exact figures. 

The CHAIRMAN. When did you make that report ? 

Mr. Shannon. About two or three mouths ago. It is an approximate 
estimate made from general information. I believe myself that the 
number is considerably larger. 

The Chairman. What number of Chinese are residents of the city of 
San Fraucisco ! 

Mr. Shannon. I cannot say. I should think there might be 30,000 
Chinamen here. 

The Chairman. Are they located in this city in a body, or indiscrim- 
inately ! 

Mr. Shannon. Tbey are mostly located in the uorth western portiou 
of the city. The business houses of the Chinamen are immediately west 
of this building. Their business is confined mostly to what is called the 
Chinese quarter. They occupy exclusively what is called Chinatown. 
But of course they are employed in different parts of the city, individu- 
ally and by companies. The question is, what effect the presence of 
Chinese has on labor in this city, and what effect it has on business in 
this State and city. The depression of labor and industry here is rela- 
tive. It is a depression because of its contrast with the flush times of 
the past, and is attributable to local causes. First the condition of the 
mining industries has radically changed from that which existed on the 
discovery of the gold mines 31 years ago. Then mining was confined to 
what is known as placer mining. That kiud of mining has virtually 
ceased, and mining now is confined mostly to quartz mining, and is done 
by machinery, so that while the precious metals contributing to the cir- 
culation of the world aggregate as large a volume as they did, the min- 
ing of them employs much less muscle on account of the change from 
placer to quartz mining. The next cause tor the depression is the ten- 
dency toward the concentrating of large tracts of land in the hands of a 
few, and the substitution of labor-saving machinery for muscle. This 
makes the demand for muscular labor less than it was formerly, when 
farming was not done by machinery. In passing from the early condition 
of industrial pursuits in California to the condition that now exists, we 
have not as yet become a manufacturing community so as to occupy that 
surplus muscle to which manufacturing would give employment. In 
time, these matters will adjust themselves, but up to the present and at 
present, we are still undergoing a change from the early condition of af- 
fairs and are gradually becoming a settled community. The reason why 
we are not a manufacturing community'yet is because labor and capital 
here are so much higher than they are in the Atlantic States or in 
Europe; and up to this date we have not been able to compete success- 
fully with the manufacturers of the Atlantic States, but iu time we ex- 
pect to be. 

The presence of the Chinese population in our midst is in the nature 
of a menace that disturbs stability and that frightens capital, to some 
extent, from engaging iu great manufacturing enterprises. The Chinese 



240 DEPRESSION IN LABOR AND BUSINESS. 

population here we look upon as an evil fraught with more or less dan- 
ger to the future of this section of the country. If our labor market here 
was overstocked, if the supply of labor was vastly in excess of the de- 
maud, and if actual com petition entered into the labor market, the result 
would be that the Chinamen would be able to drive the white men out 
of the market, because the Chinamen can labor much cheaper thau white 
men can, for the reason that they cau live much cheaper than white 
men can live or will live. They bring all their habits to this country, 
and they can live 50 per cent, at least, cheaper than white men can 
live. They leave their families in China where those families can live at 
an almost nominal sum per day, and they send back their earnings to 
China to support their families. 

The Chairman. Do they send to China all the money that they re- 
ceive? 

Mr. Shannon. All except what it costs them to live here. Now, take 
a bundled thousand Chinese laborers and a hundred thousand white 
men and draw a comparison as to their effect upon the prosperity of 
the country. The wages of a hundred thousand Chinamen at $1 a day, 
working for 26 days per month, amounts to $2,600,000 a mouth, or 
$31,200,000 a year. Assume that it costs them half of that amount to 
live here, the other half, or at least nine-tenths of it, is sent to China, 
and two-thirds or oue-half of that which it takes them to live on here is 
invested in materials, eatables and wearables of exclusively Chinese 
production, and sent here from China. I will make up the statistics as 
to the imports and exports of such materials, with the exception of tea, 
which is, of course, an article that enters into the consumption of white 
people. Therefore, the employment of a hundred thousand Chinamen 
involves the paying to them of $30,000,000 per annum, half of which at 
least goes to China, and the other half, spent for their support, is paid 
to China, and is not spent in the products of this country. Conse- 
quently the profits are not invested in this country. They are absorbed 
by Chinese labor. So all the profits of the labor of Chinamen here, over 
and above the cost of the living, are withdrawn from the country, and 
nine-tenths of the cost of that living goes to China. Consequently, to 
that extent, the employment of Chinamen here is a drain on the indus- 
trial productions of this coast, and is just the opposite of the effect of 
the employment of so many white men, who, of course, would invest the 
products of all their labor and the cost of their means of support in the 
materials and products of thiscountry. The profits of their labor would 
be^in vested in property — in building houses, &c. In other words, <t he 
Chinamen, as a mass, are Jike so many gypsies camped on our hills. 
They absorb but they do not produce; or what they do produce by 
their labor is returned to China — either taken back by themselves or 
sent to their families, or expended there in clothing, rice, and other 
materials which they consume in this country. The white man, on the 
contrary, invests here all the profits of his labor in property, or in the 
purchase of materials which go to support the various branches of in- 
dustry and business. 

The Chairman. Do the Chinamen here make any purchase of real 
estate, or put up any buildings? 

Mr. Shannon. As a rule, they do not ; a few merchants — large import- 
ing merchants — in the Chinese quarter of the city do, I believe, own 
some of their buildings. But as a rule they do not. When they acquire 
some money they return to China with it. 

The Chairman. How long do they generally remain here ? 



DEPRESSION IN LABOR AND BUSINESS. 241 

Mr. Shannon. There is no fixed rule on that point. Their going is 
entirely voluntary, like that of the white race. 

The Chairman. What effect has the presence of the Chinese on the 
question of labor f 

Mr. Shannon. Its effect is of course to reduce the compensation of 
labor. If the coudition of the labor market was such (as it is pretty 
much at the present time) that the supply of labor was greater than 
the demand, and if there was a competition in the labor market, the 
tendency of the presence of Chinese, as a matter of course, is to lower 
the prices of labor. But those other conditions which I have mentioned 
have also a tendency to lower labor here, because since the discovery of 
the gold mines, labor has been higher here than in any other part of 
the world, and is to-day higher. All kinds of labor in California are 
higher to-day than they are in any other civilized part of the world, not- 
withstanding the presence of the Chinaman. 

The Chairman. What is the general condition of the business affairs of 
the city at this time ? 

Mr. Shannon. We call it hard times, but it is only by comparison with 
the flush times of the past. It is hard times because we have always 
had such extraordinary flush times. Unfortunately for our people, in 
passing through this transformation from flush times to a settled stand- 
ard of legitimate busiuess values, we individually have adhered perhaps 
a little too closejy to some of our extravagant habits acquired in the fall 
of 1849 and the spring of 1850, so that we are only adjusting ourselves 
gradually to the new condition of things which is being brought about 
by higher laws. 

The Chairman. You have not spoken as to the moral effect of the 
Chinese element on the community % 

M . Shannon. I am not much posted on that point, and I do not think 
there is much in it. I do not think that the presence of Chinamen has 
any demoralizing effect, unless the white man wants to be demoralized. 

The Chairman. If the white man wants to be demoralized, has he an 
opportunity of being so through Chiuese sources! 

Mr. Shannon. I think not. I presume that a good deai of the lower 
strata of the Chinese population come here, and the lower strata of any 
society are demoralizing when they come in contact with the better stra- 
ta. But I think that probably the effect of adulterated liquors and all 
that kind of thing on white men is even worse than the presence of the 
Chinaman. 

Mr. O'Connor. What remedy would you suggest for the evil % 

Mr. Shannon. I have stated the perils, and I have stated that the 
Chiuese in our midst are a detriment to the material prosperity of this 
country and to its future. So believing, I have no objection to answer- 
ing your question; and the only answer is that there should be an 
amendment to the Burliugame treaty, and that the national government 
should restrict Chinese immigration. That is the remedy. 

Mr. Dickey. You have stated that the contact of the white race with 
the Chinese is demoralizing if the white race desires to be demoralized. 
I desire to know whether the contact of the better class of whites with 
the Chinese has a tendency to elevate the morals or character of the 
Chinese in this country in any way. 

Mr. Shannon. I think not. Chinese are more conservative, so to 
speak, and more wedded to their notions of religion and to their habits 
of life than the white race is. 

Mr. Dickey. Your objection to them, then, is that because they can 
H. Mis. 5 16 



242 DEPRESSION IN LABOR AND BUSINESS. 

live for less money and can therefore afford to work for less wages, they 
are on that account a detriment to the white race ? 

Mr. Shannon. That and the additional fact which I have stated, 
that they import from China what they consume here, and that they send 
their money out of the country for articles of their consumption. They 
take away the profits of their labor from this country. In brief, they are 
an Asiatic herd of grasshoppers, taking out of this country the profits 
of their labor, and they are not capable of assimilating politically with 
ns as emigrants from Europe. They never will do so and never can. 
They come here to make so much money and then they leave the coun- 
try. For all these reasons, not for auy one particular reason, I am op- 
posed to the presence of Chinese here. 1 am one of those who believe 
in keeping the prices of labor up to that standard which will enable a 
man to support his family and will prevent him reaching that point 
which the French philosopher declares to be a crime — extreme poverty. 
I am opposed to anything that tends to destroy the dignity of labor or 
to reduce it to the pauperism to which it is reduced in Europe. 

Mr. Dickey. In other words, the price of labor should not be reduced 
to the cost of a man's living ? 

Mr. Shannon. Exactly. 

Mr. Dickey. And the price of labor here is reduced to what it costs a 
man to live? 

Mr. Shannon. No, not yet. The number of Chinese^at present here 
is not a menace, and if Chinese immigration were stopped to-day, the 
Chinese question would perhaps be of no consequence as a question of 
political economy. But it is as to the future that we apprehend trouble. 
If 100,000 Chinamen produce the certaiu result to-day which I have 
tried to describe, and if the Chinese continue to come hereto the extent 
of three or five hundred thousand or a million, they would occupy the 
labor field here entirely and would drive out white labor, because they 
can work cheaper than white men, and this section of the United States 
would eventually become a Chinese colony. The land perhaps, for the 
time being, would be owned by a few whites, and we would have a 
condition of things similar to that of the middle ages, when the lands 
were owned by the barous and cultivated by their slaves. We would 
be a Chinese empire with a few white owners and the rest of the in- 
habitants Chinese slaves. I will admit that a Chinaman can work 
cheaper than a white man. 

Mr. Dickey. Does the labor of a Chinaman equal that of a white 
man ? 

Mr. Shannon. No, sir. 

Mr. Dickey. He is not capable of working so hard or doing so much 
in a day's work. 

Mr. Shannon. He can do about as much work as a white man in the 
course of a day. He works slowly and steadily. 

Mr. Dickey. What is the fact ? Does he do it ! 

Mr. Shannon. He does as a rule. Physically perhaps he is not able to 
do as much work as a white man, but as a rule he will do as much labor 
in a day as a white man. He works a little cheaper than the white 
man does. 

The Chairman. [ think you stated that he worked 50 per centcheaper. 

Mr. Shannon. No, sir; 1 say that he can live and that he does live 
50 per cent cheaper than a white man. 

Mr. Dickey. If it were so that these Chinamen could become natu- 
ralized citizens would they be willing to become citizens'? 

Mr. Shannon. I think they would be just governed entirely by selfish 



DEPRESSION IN LABOR AND BUSINESS. 243 

considerations. Where one of them thinks that he can make something 
by becoming a Christian, he will go through all the forms of Christian re- 
quirements, but he is more tenacious on that subject probably than he 
would be on the political question. 

Mr. Dickey. What is the present rate of Chinese immigration % 

Mr. Shannon. For the last year there has been very little increase, if 
any, of arrivals over departures, because of the agitation on the subject 
here, and because of the depression in business, and all that kind of 
thing. I think that all this has had a tendency to retard Chinese immi- 
gration. 

Mr. Dickey. Can you give us an idea as to the means by which Chi- 
namen are brought here ? 

Mr. Shannon. No, sir, only from hearsay; I have no personal knowl- 
edge on the subject. It is alleged that a great many Chinamen in China 
are advanced money to get here in the nature of a contract. 

Mr. O'Connor. Has Chinese immigration to California deterred Euro- 
pean and American immigration to this coast? 

Mr. Shannon. I believe that the agitation on the subject for the last 
three or tour years has had a tendency to retard immigration from the 
Atlantic States. I do not know as to European immigration. 

Mr. O'Connor. When was the wave of Chinese immigration to the 
Pacific coast at its highest? 

Mr. Shannon. I think about five years ago. 

Mr. O'Connor. While that wave was accumulating, was there not a 
sensible and visible diminution of European and. American immigration 
to the Pacific States ? 

Mr. Shannon. I cannot answer that question. I am not familiar with 
the statistics of immigration. I think that at that time it did not have 
that effect in retarding the immigration of white people to this coast. I 
think that that immediate effect has been since the political agitation 
here on the subject. 

Mr. O'Connor. Do the Chinese live exclusively to themselves in Cali- 
fornia ? 

Mr. Shannon. O, yes. A room of this size (that is, about twenty 
feet square) would be occupied by a dozen Chinamen. 

Mr. O'Connor. The quarter of the city in which they live is a sort of 
empire of China iu the heart of San Francisco ? 

Mr. Shannon. Yes. It is a little off to one side of the city. 

Mr. O'Connor. What number of Chinamen live in one building? 

Mr. Shannon. I cannot say, but a very large number. 

Mr. O'Connor. What does it cost per day to subsist a Chinaman in 
San Francisco ? 

Mr. Shannon. I cannot say that. He eats imported rice mostly. 
How much it costs him I do not know. The Chinamen import their own 
clothing. They never adopt our costume. 

Mr. O'Connor. They import all the manners, habits, and customs of 
their own country ? 

Mr. Shannon. Yes, and they import their rice, which is to them what 
flour is to us, a staple. 

Mr. O'Connor. Are they a healthy people ? 

Mr. Shannon. Very. Physically" they are a very strong, plodding 
race, with great powers of endurance. 

Mr. O'Coxnor. Have any diseases broken out in the Chinese quarter % 

Mr. Shannon. No, not that I ever heard of. Every now and then a 
case of leprosy is reported. I never had any personal knowledge of any- 
thing of that kind. 



244 DEPRESSION IN LABOR AND BUSINESS. 

Mr. O'Connor. Do the Chinese bring their families here with them ? 

Mr. Shannon. Very few indeed ; not one in twenty. 

Mr. O'Connor. In what kinds of labor do they principally engage 1 ? 

Mr. Shannon. In farming, and as house servants, cooking — and all that 
kind of thing; sometimes in mining, in railroad building, in manufact- 
uring, except as to machinery. I believe there are no Chinese em- 
ployed in any of the founderies. They work in cigar factories, woolen 
factories, shoe factories, and such kind of labor. 

Mr. O'Connor. What are the average wages paid to a Chinaman? 

Mr. Shannon. I do not know. Chinese house-servants get from $15 
to $25 a month. 

Mr. O'Connor. Are there many laboring men out of employment now 
in San Francisco ? 

Mr. Shannon. Yes, sir, a good many. 

Mr. O'Connor. To what do you ascribe that lack of employment ? Is 
it to be traced to the Chinese immigration? 

Mr. Shannon. I ascribe it more to the changed condition of business. 
As I stated before, there has been a transformation from mining and 
agricultural pursuits purely, and we have not yet become a manufactur- 
ing community. We lack that great element of industry in this State. 
Things will adjust themselves in time, and pending that adjustment of 
course this depression and this want of employment will exist. 

Mr. Martin. Is the depression owing to the presence of Chinamen 
here ? 

Mr. Shannon. Not entirely. The Chinaman cuts more or less figure 
in it. 

Mr. Martin. .Is the presence of Chinese in this city the cause of the 
depression % 

Mr. Shannon. No, sir; not whollj^. 

Mr. Martin. Your idea is that the evil, if it be an evil, has existence 
only in the future ? 

Mr. Shannon. In the present and the future. 

Mr. Martin. I understood you to say that there is no great trouble 
in the present, but that it is your idea that the influx should be stopped, 
and that if no more Chinese immigrants are brought here no harm will 
be done. 

Mr. Shannon. Not so much harm. 

Mr. Martin. The real trouble is as to the future ? 

Mr. Shannon. Yes; if Chinese immigration continues. Chinese la- 
borers, even if they worked at the same rate as white men and did not 
come in competition with white labor and reduce the price of labor, 
would still have a result on the material prosperity of the country by 
reason of the fact that Chinamen absorb the profits of their labor and 
send or take them to China. 

Mr. Martin. Were you ever in Chinatown % 

Mr. Shannon. Yes, some years ago, but not of late years. 

Mr. Martin. Do the Chinamen subsist on meats % 

Mr. Shannon. They eat some meats of course. 

Mr. Martin. Do American citizens trade much in Chinatown ? 

Mr. Shannon. No, sir ; they trade with each other exclusively. 

Mr. Martin. If an American citizen wanted to buy a piece of meat 
he would go to the market for it? 

Mr. Shannon. Yes; the Chinamen have their Chinese butchers in 
Chinatown. They buy vegetables and meats here of course, but rice is 
their main staple of food, and they import it from China as they also 
import their clothing. " 



DEPRESSION IN LABOR AND BUSINESS. 245 

Mr. Martin. The trouble from the Chinese, in your idea, exists in the 
future, and your remedy would be for Congress to p iss a general law 
to prevent the further increase of such immigration ! 

Mr. Shannon. Yes. 

Mr. Martin. According to your information, you think that the num- 
ber of Chinamen in the United States is about 90,000? 

Mr. Shannon. Yes; I think that it is over that number, but that is 
my information. I do not think, however, that it is correct. 

Mr. Martin. I understood you to say that the introduction of ma- 
chinery has brought about a good deal of this trouble in the labor mar- 
ket, and that mines which were formerly worked by muscular labor are 
now worked by machinery? 

Mr. Shannon. Yes ; a good deal. The use of machinery has increased 
in the mines and on the farms, and to that extent of course it affects 
the demand for labor. In passing from the old condition of things to 
the new, we have not become a manufacturing community to the extent 
of absorbing the surplus labor thrown out of employment by machinery. 

Mr. Martin. Is it not true that manufactories cannot be established 
for the reason that labor here (even with the Chinaman) is much higher 
than it is in the East, and that goods can be manufactured in the East 
and delivered here cheaper than they can be made here? 

Mr. Shannon. There is a good deal of truth in that. 

Mr. Martin. Cannot a man in Boston manufacture shoes and deliver 
them here cheaper than they can be made in your city? 

Mr. Shannon. There are several shoe factories here. 

Mr. Martin. Is it not true as a general thing that you send hides 
east, and that they are manufactured into shoes, and that the shoes are 
sent back here cheaper than they can be made here? 

Mr. Shannon. Yes; but at the same time we have a number of shoe 
factories in the city. 

Mr. Martin. Can the shoes which are manufactured here be sold as 
cheaply as those which are manufactured in the east ? 

Mr. Shannon. I presume they can be, otherwise they would not con- 
tinue to manufacture. 

Mr. Cowg-ill. I understood you to say a while ago that labor and 
capital are so much higher here than they are in the Atlantic States 
that manufactories cannot be established here successfully. 

Mr. Shannon. A good many articles could not be manufactured here. 

Mr. Cowgill. Do you mean now to say that you did not mean that 
remark to have a general application, or how general did you intend it 
to be? 

Mr. Shannon. I meant it to have a general application, but of course 
there are exceptions. I take it for granted that if a people so enter 
prising as the population of this coast, with money as abundant as it 
is here, and with a great deal more labor than there is any demand for, 
does not engage in manufacturing, there must be some reason for 
it. There must be some reason why our capital and enterprise do not 
engage in manufacturing pursuits. 

Mr. Cowgill. Is it not pretty evident that the reason for that is 
that there is a scarcity of labor here, and that you want more cheap 
labor than you have got ? «* 

Mr. Shannon. Xo; there is abundance of labor here at present. 

Mr. Cowgill. If there is abundance of labor here, why is it that it 
is not engaged in manufacturing the various fabrics used here ? 

Mr. Shannon. My opinion is that capital is too diffident and too fright- 
ened to engage in manufacturing here. I believe that this Chinese agi- 



24U DEPRESSION IN LABOR AND BUSINESS. 

tation and the presence of Chinese here are a menace to the stability 
of society, and frighten capital from investing. 

Mr. Cowgill. In what way does the Chinese question frighten cap- 
italists ? 

Mr. Shannon. Because of the general commotion or disturbance that 
they think may follow. 

Mr. Cowgill. You mean by that that there is such intense bitterness 
of feeling existing between the two classes of laborers here that capital 
is fearful of investing lest it might meet with destruction, as an out- 
growth of that bitter feeling J 

Mr. Shannon. That is it exactly. To a certain extent that is true, in 
my opinion. 

Mr. Cowgill. What makes that bitterness of feeling 1 

Mr. Shannon. It arises from the fact that the Chinese are here and 
are working cheaper than white men can work. 

Mr. Cowgill. What does a common laborer get here per day ? 

Mr. Shannon. I believe he gets from $1 to $1.50 and $2 a day. 

Mr. Cowgill. Do not the laborers on the streets get from $2 to $2.50 
a day ? 

Mr. Shannon. The municipality may pay them at that rate, but I am 
speaking of the wages they get in the business walks of life. 

Mr. Cowgill. In what kind of labor do they not get from $2 to $2.50 
a day ? 

Mr. Shannon. I think that in farming and common labor they get 
all the way from $1 to $2 a day. 

Mr. Cowgill. Then it is not because there is not capital enough here 
to invest in manufactures that people do not engage in them % 

Mr. Shannon. No, sir ; there is abundance of capital here. 

Mr. Cowgill. You think there is labor here sufficient to justify men 
engaging in manufactures, if it were not for the fear on the part of cap- 
italists that that kind of property would be destroyed because of the 
bitter feeling that exists among classes here % 

Mr. Shannon. That is it exactly. 

Mr. Cowgill. You said something about Chinese establishing them- 
selves in some particular locality in this city called the Chinese quarter. 
Do you not know it as a fact that foreigners are very apt to do that; 
when they locate themselves in large cities — that they are very apt to 
settle in certain portions of the town or city % Is not that a common 
thing to men of all nationalities ? 

Mr. Shannon. Not to the extent that it is with the Chinaman. There 
is a clannishness, of course, belonging to race and language and creed. 

Mr. Cowgill. Take for instance the Germans. Are they not apt to 
congregate themselves in some particular part of a town or city, and 
very frequently to maintain their own schools and churches? 

Mr. Shannon. Yes ; to a limited extent. 

Mr. Cowgill. I understood you to say that the Chinese trade is al- 
most exclusively with themselves? 

Mr. Shannon. Yes, sir. 

Mr. Cowgill. They do not have any trade with the white people ? 

Mr. Shannon. Yes. 

Mr. Cowgill. Then what is there in that trade which is injurious to 
this country ? 

Mr. Shannon. It is injurious in its general results. They import all 
their rice ; that is their staple. The Chinese merchant imports it, takes 
it to his store, and sells it to the Chinese. The Chinese merchants im- 
port pretty much all the articles that the Chinese population here con- 



DEPRESSION IN LABOR AND BUSINESS. 247 

suine. They import all their rice, clothing, and other things that the 
Chinese nse, with the exception of the few articles which cannot be im- 
ported, viz, vegetables and meats. These they buy of us. Therefore 
the balk of what they cousume is paid f6r iu China, and the profits on 
their labor they take to China, wheu they get through here, instead of 
spending them in this country, as the white man does — investing them 
in houses and land and furniture, and everything that goes to make up 
a country. 

Mr. Cowgill. If they do not own their own houses they must rent or 
lease from somebody else ? 

Mr. Shannon. Yes. 

Mr. Cowgill. And do they not pay quite as high rents as white men 
do for the property which they occupy ? 

Mr. Shannon. Yes. 

Mr. Cowgill. And is not what they pay for rents left among our 
citizens ? 

Mr. Shannon. Yes, but the few houses which they occupy in compar- 
ison with what white people occupy is another objection to them. They 
do not build any houses to live in, but from 30 to 40 Chinese live together 
in a room no larger than this (say 20 feet square). 

Mr. Cowgill. They pay pretty large rents for their houses, do they 
not? 

Mr. Shannon. Yes, they have to pay of course all that the white men 
can get out of them. 

Mr. Cowgill. Then it is a matter of taste with the Chinamen as to 
how they live-! 

Mr. Shannon. Yes, I believe that the large Chinese importers gener- 
ally own their own stores. 

Mr. Cowgill. You say that labor is higher here to day than it is at 
any other place in the civilized world ? 

Mr. Shannon. Yes, I think there is no question about that. 

Mr. Cowgill. Does not that argue that you want more cheap labor 
here, in order that your people may engage in manufactures and in other 
occupations and pursuits of life"? 

Mr. Shannon. Not if it is at the expense of the future welfare of the 
country. 

Mr. Cowgill. Is not that a speculation of your own? 

Mr. Shannon. That is a matter of opinion. 

Mr. Cowgill. You do not know but that the Chinese may change 
their present system of importing what they eat? 

Mr. Shannon. Chinamen never change. I have been here thirty 
years and I have not noticed the slightest change in them. 

Mr. Cowgill. Do they violate your laws more than white people do? 

Mr. Shannon. No, sir; they are a very peaceable, quiet, plodding, in- 
dustrious people. 

Mr. Cowgill. Did it ever occur to your mind that every man (pro- 
vided that he lives in obedience to the laws of the country where he re- 
sides) has a right to pursue his happiness in his own way, and to use 
his earnings as he chooses, so long as he injures no one and does not 
disobey the laws of the country? Do you not know that that is one of 
the privileges which some people believe belong to the whole human 
family ? 

Mr. Shannon. I am aware of that broad-guage doctrine. 

Mr.CowGiLL. It is a kind of American doctrine, is it not ? 

Mr. Shannon. It has been the American doctrine. We have played 



248 DEPRESSION IN LABOR AND BUSINESS. 

the role of the great republican asylum for the oppressed of all the 
world, and I think that it is about time we quit playing that role. 

Mr. Cowgill. Do you want it confined to Chinamen alone, or would 
you extend it to other nationalities'? 

Mr. Shannon. I draw the distinction between Chinamen and other 
nationalities for this reason, that the other races of whom we are speak- 
ing (regardless of language) come here from Europe, and their children 
become as good Americans as native-born Americans are. I am only a 
second degree removed myself. They amalgamate and assimilate, and 
after the first or second generations they cannot be identified as having 
sprung from any European country. But Chinamen are entirely differ- 
ent. They have a different civilization.; their modes of life are different; 
they will not assimilate with other nations; they do not want to do so; 
they do not ask for political favors. They come here and encamp on 
our hills and take away the profits on their labor. They build no houses 
here, and leave no marks. 

Mr. Cowgill. Have they not performed very much of the labor on 
your public works, and have they not helped to build your streets and 
your railroads ? 

Mr. Shannon. To a certain extent they have, and to that extent they 
have done no harm. 

Mr. Cowgill. To what extent have they not done good % 

Mr. Shannon. They have done some good. But we are dealing with 
thisquestion notsomuch for the present as for the future. As the Chinese 
press in upon us the white race gradually retires, or ceases to come here, 
until it is only a question of time whether the Chinese can (I do not 
say that they will) come here and virtually occupy this whole coast. 1 
do not think that white people will come to settle here if the Chinese 
occupy the country. As a laboring man, I certainly would not immigrate 
to California if I knew that I had to come in competition here with Chi- 
nese labor. 

Mr. Cowgill. Is not one of the evils that are afflicting you at this 
time on this coast too great a disposition on the part of the white men s 
who come among you and who are living here, to make fortunes sud- 
denly by engaging in stock speculations and such things'? Is it not one 
of the evils, that white people who come here have not the patience to 
pursue steadib that line of industry which is sure, if followed, to bring 
a competency in the end? Is it not true that they have that restless 
speculative feeling among them which makes them, whenever they have 
anything to invest, engage in speculation? And because the number of 
unfortunates in-such speculations largely preponderates over the number 
that are fortunate, has not that been productive of more evil than any- 
thing else that is afflicting this country? 

Mr. Shannon. Mining is a precarious business. It is a game of 
chance. Mining has been one of our greatest sources of wealth, and is 
one of our greatest sources of wealth to-day. Every mine is a game of 
chance, and eve^body who engages in miuiug becomes imbued with 
the spirit of chance. That fact has of course affected the people here, 
as it would affect any people anywhere, and to that extent we arc af- 
fected differently from the Eastern Atlantic States. I cannot see how 
any system of law can regulate that, because it is one of the things 
which will continue so long as there is mining. A good many people 
will be affected and demoralized by it. I do not see that the Chinese 
question cuts any figure in that matter. That is independent entirely 
of the Chinese question. 

Mr. Cowgill. But my question was whether that disposition among 



DEPRESSION IN LABOR AND BUSINESS. 249 

your people did not affect; them more injuriously, or as injuriously, as 
anything else"? 

Mr. Shannon. No; I think not. We would be a very tame people 
here without mining. 

Mr. Oowgill. Is not the existence of large landed estates in this 
country, of large tracts of land owned by one individual, a serious ob- 
jection to the growth, development, and improvement of the material 
interests of the country % 

Mr. Shannon. I think that the existence of large landed estates in 
this State, and the tendency to concentrate large tracts of land in the 
hands of a few capitalists, is, next to the Chinese question, the greatest 
curse of this part of the country. 

Mr. Oowgill. If those estates were divided up into little homesteads, 
sufficient to afford a competency for a man and his family, would not 
that change almost make it unnecessary to take any steps to prevent 
Chinese immigration! 

Mr. Shannon. In the first place, I believe in the right and duty of 
government to limit the ownership of land to small tracts. If I had the 
power, I would limit it to 160 acres by a sliding scale in the future, 
coming into play on the death of the owners. Not on the principle of 
confiscating vested rights, but I would make a prohibitory system which 
would in time result in dividing up the lands into small tracts. Cali- 
fornia has within her limits of good farming land, of land susceptible of 
a high state of cultivation, enough to make 500,000 one hundred and 
sixty-acre farms, which would support from six to eight millions of peo- 
ple. In addition to those lands, she has on her mountains, ranging as 
high as 2,500 feet altitude, the greatest vineyard capacity of any coun- 
try on the continent of America. There is enough of such land here to 
make one or two or three millions of vineyards, which would support 
45,000,000 more of people ; and if Congress or the Government of the 
United States had a proper conception of the question, and would give 
us a system of law that would encourage the production of wines and 
brandies, not levying a tax on the maker of the wine and brandy at the 
rate of a million dollars a month, or compel him to take it to a govern- 
ment warehouse and put it in the hands of other people to be tampered 
with, but if it would do what the French government does, encourage 
the home production of wine and brandy, we could save to the United 
States hundreds of millions of dollars, which we now pay to France for 
wines and brandies. The philosopher will tell you that this will, per- 
haps, adjust itself in time without the interference of the government, 
but I am one of those people who believe that it will not, but that it is 
the duty of the government to aid in the adjustment. That is one of 
the remedies for absorbing the surplus muscle which machinery drives 
out of the workshops; and what to do with that surplus muscle is the 
question now which all the governments of the earth have to deal with. 
The development of the arts and sciences, the discovery and invention 
of labor-saving machinery, and the powers of steam and electricity have 
revolutionized the world. Machinery has increased and cheapeued 
productions, until finally the producing capacity of machinery is such 
that it far outstrips the power of consumption, and muscle goes a-beg- 
ging, and is turned into tramps looking for something to do. There 
must be a remedy for this. The evil exists to-day, not only in the 
United States, but to a more fearful extent in Great Britain. 

Mr. Dickey. Do you mean to say that overproduction is the trouble? 

Mr. Shannon. Yes; I mean to say that the labor-saving machinery 
now in use is capable of overproducing and of glutting the market, 



250 DEPRESSION IN LABOR AND BUSINESS. 

and that the power of consumption is not equal to the power of produc- 
tion, so that muscle goes a-begging because machinery performs the 
work. Now, one of the remedies is, that the lands shali be cut up into 
small farms and the people placed upon them. The next remedy is, a 
reduction in the hours of labor, as an autidote to the power of ma- 
chinery. If with this machinery all the muscle were employed, the 
overproduction would become vast, and would rapidly produce de- 
pression and idleness. Until, so to speak, consumption catches up with 
production, you cannot put the laborers back again. If we have 
reached that state of things by reason of this extraordinary labor-sav- 
ing machinery, some remedy has to be found and applied. While we 
have been revolutionized in the last one hundred years in the material 
world and in the relations of capital to labor, the revolution in the next 
fifty years is to come in the way of society adjusting itself, and of gov- 
ernments adjusting themselves to the new condition of things brought 
about by these inventions. One of the remedies is the cutting up of 
•the lands into small farms. 

Mr. Martin. How would you propose to do that ? 

Mr. Shannon. I would change the Constitution first. That is neces- 
sary. 

Mr. Martin. On our way here we passed through a farm of 47,000 
acres in this State. How would you propose to take away that land 
from its owner? 

Mr. Shannon. I would have the Constitution and law so changed that 
when the owner of that land dies the estate must be cut up and sold to 
the highest bidders in parcels not exceed ing 160 acres. 

Mr. Martin. Would you sell it if the heirs did not want it sold ? 

Mr. Shannon. I would make it unlawful for any man to own, directly 
or indirectly, by purchase or otherwise, in any shape or form whatever, 
any quantity of agricultural land to exceed so many acres. 

Mr. Martin. Would not that law be an ex post facto law? 

Mr. Shannon. I have stated that I would have it prospective. Look 
at the history of France and the condition of things existing in that 
country in regard to the ownership of lands at the time of the revolt 
tion of 1789, and look at the condition of France to-day as the conse- 
quence of that revolution in regard to the ownership of the soil. To- 
day, of all the European nations, the people occupying the lands of 
France are perhaps the most frugal and happy and prosperous. 

The Chairman. How would you get at your proposition to reduce the 
hours of labor 1 

Mr. Shannon. I hold this to be true, that any system which overpro- 
duces, and which causes depression and hard times and misery and pov- 
erty, is unhealthy and improper. I think it will be conceded (and if it 
is not conceded to day it will be within twenty years) that the pro- 
ducing capacity is far in excess of the consumiug capacity ; that is, the 
producing capacity worked at the rate of teu hours in the twenty-four, 
combined with machinery as heretofore. Before the invention of ma- 
chinery there were none of the luxuries of life to be seen in the house 
of the mechanic. To-day the house of the mechanic is better furnished 
than the palace of the baron one hundred years ago, because furniture 
is cheaper. These are some of the compensations of labor-saving ma- 
chinery, and while we cannot reverse what has been already accom- 
plished, we must adjust ourselves to it. Now, to illustrate, suppose 
that 100 men in this city could make with machinery all the brooms that 
this State can consume aud a reasonable surplus, and suppose there 
were 100 other men idle who wanted work at that business and could 



DEPRESSION IN LABOR AND BUSINESS. 251 

not get it because the 100 men already employed, at ten hours a day, 
with machinery produced all the brooms that could be used and a sur- 
plus over. And suppose you reduced the ten hours of labor to five 
hours, and put the 200 men to work, of course the cost of the brooms 
will be appreciated in proportion. But that is one of the things to 
which society must adjust itself. Labor must be employed for the peace 
and stability and welfare of society, and a reduction of the hours of 
labor and a division of the lands are remedies which in my opinion must 
necessarily be resorted to. 

Mr. Dickey. Jf live hours of labor are sufficient for the production of 
all that can be consumed, what would you propose to do for the peace 
of society with the other nineteen hours that are unemployed'? 

Mr. Shannon. That question would take care of itself. 

Mr. Dickey. Would there not be a good deal of idleness? 

Mr. Shannon. If that five hours' work will produce something that 
keeps everybody's stomach full, that is better than to have some starv- 
ing to death. . x 

Mr. Cowgill. Do you not believe that auy industrious, worthy, good 
citizen who actually makes an earnest effort to get employment can get 
it in this country? 

Mr. Shannon. I suppose he can get some employment. 

Mr. CowoiLL. Do you not see men all around who have nothing but 
their hands, who get employment and are engaged in business and can 
be accumulating money? 

Mr. Shannon. These are individual cases and are details which do not 
in my opinion affect the principal proposition that I have laid down, that 
there is a capacity to overproduce, and that overproduction is one of the 
causes of depression. 

Mr. Cowgill. Does not that prove that the depression is more owing 
to the lack of perseverance and industry on the part of individuals than 
to the general causes that you have been speaking of? 

Mr. Shannon. No ; I attribute the evil to machinery and to too many 
hours of labor, which cause overproduction. 

Mr. O'Connor. You say that the Chinese population in San Francisco 
is about one fifth of the whole number? 

Mr. Shannon. I think so. 

Mr. O'Connor. What proportion of the taxes do the Chinese pay? 

Mr. Shannon. A very small proportion. 

Mr. O'Connor. Do you know what wages a Chinaman receives in his 
native country? 

Mr. Shannon. No, sir; I have no idea. 

The Chairman. You have left us under the impression that the con- 
flict here is only between the white laborer and the Chinaman. I want 
to know if the rest of this community is in harmony on this Chinese, 
question ? 

Mr. Shannon. I think it is pretty much a unanimous thing. 

Mr. Dickey You mean to say that there is no class of American 
citizens in this city favorable to Chinese immigration ? 

Mr. Shannon. I do not know of any ; if there is, I do not know of it. 

Mr. Shannon subsequently furnished the following statement of ex- 
ports and imports passing between the San Francisco custom-house and 
Chinese ports : 



252 DEPRESSION IN LABOR AND BUSINESS. 

Exports, 4 years and 7 months ending JulyZl, 1879. 

SPECIE. 

1875 $5,674,917 

1876 7,309,895 

1877 13,758,200 

1878 8,828,134 

1879 (7 months) 2,169,797 

37, 740, 943 

FOREIGN SPECIE. 

« 

1875 $1,691,373 

1876 2,666,741 

1877 2,970,908 

1878 2,818,219 

1879 (7 months) 2,060,734 

12, 207, 975 
37, 740, 943 

Grand total 49,948,918 

Imports of all hinds. 

FREE OF DUTY. 

1875 $522,439 

1876 589,922 

1877 1,650,310 

1878 _ 4,170,346 

1879 (7 months) 2,399,594 

9, 332, 611 

DUTIABLE. 

1875 $3,650,431 

1876 3,249,064 

1877 3,106,754 

1878 3,144,573 

1879 (7 months) 2,296,483 

15, 447, 305 
9, 332, 611 

Grand total 24,779,916 

Specie. — Free of duty. 

1875 $25,931 

1876 6,426 

1877 8,423 

1878 15,567 

1879 (to July 31) 126,235 

182, 582 
Imports. — Dutiable. 

RICE. 

Pounds. 

1875 46,383,850 $1,141,462 

1876 46,948,001 1,071,174 

1877 38,428,566 965,220 

1878 41,431,285 1,221,188 

1879 (7 months) 32,587,149 894,758 

205, 783, 851 5, 293, 802 



DEPRESSION IN LABOR AND BUSINESS. 253 

BROWN SUGAR. 

Pounds. 

1875 5,608.529 $183,756 

1876 9,664,448 327,166 

1877 7,791,070 365,888 

1878 1,696,644 69,114 

1879 (7 months) 615,512 30,557 

25, 376, 203 980, 481 

San Francisco, August 15, 1879. 
Views of Mr. Loving Pickering. 

Mr. Loring Pickering: came before the committee. He said, id re- 
ply to preliminary questions: I came here in 1849; I have been here 
most of the time since, except perhaps four years; I am 67 years of age; 
I am engaged in editing and publishing the Evening Bulletin and the 
Morning Call. 

The Chairman.. Give us, in as condensed a form as you can, your ideas 
with reference to this Chinese question. 

Mr. Pickering. My opinions have been decided on that question. I 
am of the opinion that ultimately Chinese immigration will break up the 
business of this coast unless there be some remedy provided. Mr. Shan- 
non has given the committee a mistaken view as to labor. He is not so 
well acquainted with the labor market as I am. He occupies a public 
office, and the men with whom he associates have places. Now, there 
is not a day that men do not come to me for employment. This city is, 
I will not say full of men who are unemployed, but there is a large num- 
ber of men here who cannot get employment, even for $1 or $1.50 a day. 
A friend of mine came here two months ago and has been ever since 
trying to get employment at $1 a day. The whole State is in an extra- 
ordinary condition in regard to labor. We commenced here when labor 
was high. All of us who are carrying on business retain our men and 
do not reduce their wages. The city is full of all kinds of business now, 
and employers are paying more than they can afford to ; they are mak- 
ing no money ; but they are doing this in order to take care of the fami- 
lies of those whom they employ. The printing business is perhaps as 
good a business as any other here, and yet I presume that there are now 
50 men wanting to get into one of our offices and willing to work at a 
small rate ; the city is full of printers who would work for low wages. 
This market is full of men who cannot get employment, and yet if you 
inquire of employers what they are paying they will tell you that they 
are paying good prices. I have a brother-in-law in the country, farming, 
and he tells me that men are there every day looking for work, and that 
he can hire abundance of them for $15 a month and found. I believe 
that to be the condition of labor at the present time. In regard to Chi- 
nese labor, I will give a little different view of it from Mr. Shannon. 
The Chinese are eminently shrewd. They know as well what they are 
about as we do. They do not work for the wages at which they would 
have to work in China. I have no doubt that contracts can be made in 
China for men to come here and labor at $1 a month ; but they come 
here and they do not work below our prices; they take just as much as 
they can get. If you take a Chinese servant into your house he will 
work pretty low as long as he cannot speak the English language, but 
as soon as he gets qualified the price goes up ; they keep the price just 
under that of white labor. There are not very many Chinese out of em- 
ployment in this city because they get work where others do not. 



254 DEPRESSION IN LABOR AND BUSINESS. 

Now, about manufacturing. Before tbe Chinese flooded in upon us 
so rapidly we had begun to be a manufacturing people ; there were a 
good many branches of manufactures carried on here that were consider- 
ably flourishing, but the Chinese came in and they overstocked the 
market. Take the article of potatoes, for instance; tip to this year po- 
tatoes have been high, and it would pay the farmer to raise them, but 
now potatoes bring a price not high enough to pay a white man for send- 
ing them to market. I inquired the reason, and I fiud that Chinese 
have taken tracts of land and are farming on their own account, and the 
market is becoming so flooded with vegetables that the white producer 
cannot afford to sell at the market rate. It is so with almost everything. 
As to boots and shoes, for instance, there had grown up a prosperous 
business here in that branch, but now the Chinese manufacture boots 
and shoes, and a good many retail dealers who caunotpay the prices for 
shoes manufactured by white labor buy the shoes of Chinese manufac- 
ture. If the Chinese go on as they are going you will find that boots 
and shoes manufactured here by Chinese can be sent East in competition 
with the shoes of the eastern manufacturers. In regard to our street 
improvements, the Chinese are not permitted to work upon them. If 
the city were to permit Chinese laborers to be engaged in grading 
lots and in improving the streets, there would be an excitement, and yet 
the Chinese would work upon the streets for one-half of the wages paid 
to white men. Now, about rents, Mr. Shannon was asked if the Chinese 
did not pay high rents. I will tell you how that is. A few Chinamen planted 
themselves in the heart of the city ; they hired places for which they paid 
pretty liberally ; but they have bought only a few pieces of property here. 
Four years ago, before there was much excitement on the subject, a few 
merchants did buy property here, but that has ceased. Mr. Shannon 
gave you the impression that there was no trade between the Chinese 
and our people; that is contrary to my observation. The city is gradu- 
ally being perambulated by Chinese peddlers; a Chinese peddler goes 
into every house, taking in his baskets everything that he thinks he can 
sell. The trade with them is very large ; they peddle vegetables all 
over the city, carrying them around in baskets. The Chinese washing- 
houses keep the price of washing at a little less than white women can 
wash for. Now, about trade: The white people do buy goods icom the 
Chinese merchants; the fancy goods people do so. Chinese merchants 
import rice and teas. This Chinese question commenced in 1852-'3. 
The Chinese came here and they went to the mines. Our people at that 
time could make $7 or $8 a day at the mines, and were unwilling to 
work ground that would not pay them more than $3 or $4 a day ; conse- 
quently the Chinese crowded in and worked a good deal of that ground, 
and they have been working that ground from that time to this, and I 
do not doubt that the Chinese have carried out a hundred millions of 
gold from those mines. The thing is going on now, but to a less extent. 

The Chairman. This competition that is constantly going on, this 
peddling and working and selling goods under price, what effect has it 
on the industries and labor of white men "? 

Mr. Pickering-. Mr. Shannon was asked if we were not a speculative 
people. We have a very intelligent, enterprising people here. They 
are laborious and frugal too. When they had abundance of money they 
spent it freely. Before the recent difficulties with our banks took place, 
the common people of this city had nearly seventy millions of deposits 
in the savings-banks alone. There has been no such instance of the 
kind in all this country. Of course there are speculators, as there are 
everywhere else, but this city is full of people who have made their money 



DEPRESSION IN LABOR AND BUSINESS. 255 

by careful industry, just as careful as could be found in Massachusetts. 
When the agitation first commenced, it seems as if no oue understood 
it but laboring men. They could understand that they could not get as 
much wages when they had to compete with Chinese labor. Very 
quickly the laboring men began to lack employment, and then the 
merchants and the tradespeople generally began to feel the effect, until 
now the agitation has reached every sensible man here. There are no 
men here who want Chinese labor except those who have large tracts of 
land and who have an idea that they cau cultivate it aud export wheat to 
advantage. But everybody else has got the contrary opinion. Our 
mercantile business is in stagnation. Why i Because the common people 
who earn money have not the money to pay to the merchant. There is 
money in the banks yet, but the great masses of the people are close for 
money. 

The Chairman. What effect has this cheap Chinese labor had on 
the females who formerly had employment at good prices ? 

Mr. Pickering-. I never have employed a Chinaman in my house yet. 
I have had but one opinion of their employment, and that is that it 
is really restricting the employment of white families who now can 
scarcely earn an honest living. The effect of Chinese labor in house- 
holds is to establish that kind of restrictive arrangement which formerly 
existed in Southern States, so now it -is unfashionable for American 
women to go and work in a family. They have got above it. This 
Chinese labor is bringing down all of them. Now, as to demoralizing 
the community. It is notorious that the Chinese female population is 
demoralizing our youth. One man said to me recently, "If a boy gets 
a 'bit 7 he can go to these Chiuese houses of prostitution." 

The Chairman. Are there any Chinese women in this Chinese quarter 
of the city who are not prostitutes ? 

Mr. Pickering. I cannot tell. Those who are well posted say that 
there are very few. I will not say but that some Chinese merchants 
may have brought respectable women here. 

The Chairman. Have you ever been through the Chinese quarter 
in this city % 

Mr. Pickering. A thousand times. 

The Chairman. Give us an idea of it. 

Mr. Pickering. When the Chinese first came here, they hired 
places that were eligible, and they paid big rents, but now they have 
crowded into a particular quarter of the city and have so ruined the 
adjacent property that it cannot be rented or sold except at low prices. 
I know a young lady who bought property a few years ago adjacent to 
the Chiuese quarter, and now she says she cannot get half rent for it, 
because the very poor white people cannot afford to pay so much rent 
for it, and she cannot rent it to anybod}^ else. 

The Chairman. Is the Chinese quarter a notorious fact as to loca- 
tion ! 

Mr. Pickering. Certainly. 

The Chairman. Is there any other nationality that can be defined in 
this city by location 1 

Mr. Pickering. No, sir; in early times, when the Frenchmen came 
here, they did locate on a certain street, but still there were other peo- 
ple living on the same street. 

The Chairman. There has been no French quarter % 

Mr. Pickering. Not properly speaking. There has been more of a 
French quarter than of any other nationality. 



256 DEPRESSION IN LABOR AND BUSINESS. 

TheCHALRMAN. Have these Chinese people here a system of laws of 
their own by which tbey govern themselves? 

Mr. Pickering. I believe that is well understood. I have no doubt 
of it, 

The Chairman. Does that system come in conflict with the munici- 
pal laws of this city ? 

Mr. Pickering:. I think so. This city is full of people who are not 
going to stay here if the Chinese keep coming in. I am free to say that 
if I had a family here I would not let it remain, because I think that the 
Chinese will utterly overwhelm the State. Still I do not believe that 
that will be permitted. The people of the Eastern States will see that, 
if it be permitted, the wealth of this coast, instead of going to the Eastern 
States, will drift to China; and I think that a remedy will be found. I 
do not think that this Pacific coast can sustain itself unless there be a 
remedy for this evil. 

The Chairman. Do these Chinese people bring here all their customs 
and manners, their religions, their idols, and their gods? 

Mr. Pickering. Certainly ; you cannot undo it at all; you cannot con- 
vert them. AChinaman will go and join a Sabbath-school, but ij is sim- 
ply that he may learn the English language so that he may be able to 
earn more money. There is a little missionary place here about which 
people have been very enthusiastic, but I think that its results have 
been no more than a grain of sand on the seashore. 

The Chairman. What is the system of religion practiced by these 
Chinese so far as it appears to the eye! 

Mr. Pickering. They have a temple up here. 

The Chairman. Give us an idea of the character of their worship. 

Mr. Pickering. They have idols in their temple, before which they 
burn pieces of paper. When they go out to their cemetery they have 
little slips of paper which they distribute around. You will see these 
little strips of paper dropped all along. At the cemeteries there are 
hogs cooked. 

The Chairman. Do they have their idols ? 

Mr. Pickering. Certainly, in their temple. 

The Chairman. What similitude have their images % 

Mr. Pickering. They are strange looking idols. I cannot describe 
them. They are hideous looking things. 

The Chairman. They have eyes and ears and noses ? 

Mr. Pickering. Yes. 

The Chairman. Feet and arms ? 

Mr. Pickering. Yes ; I believe so. They are intended to be the im- 
ages of a human being, but they are very deformed. 

The Chairman. How long have you been familiar with their customs 
and habits here? 

Mr. Pickering. Ever since they began to come here, which was, I 
think, first in 1850. 

The Chairman. Is it practicable to make these people conform in any 
particular to our customs and usages? 

Mr. Pickering. It is utterly out of the question to think so ; there 
is no such thing as doing it. There are United States laws against 
making contracts for coolie labor. If it were not for these laws and for 
the six Chinese companies, our people could go to China and contract 
for an abundance of labor at $3 or $4 a month. Now how easy for 
these companies to arrange it so that they will have the advantage of 
the wages of these Chinamen ? They have a system of espionage over 
the Chinaman so that they are able to extort from them double the 



DEPRESSION IN LABOR AND BUSINESS. 257 

amount advanced. What the arrangement is now I do not know, but 
it has been for years that the Pacific Mail Steamship Company (subsi- 
dized by the government) would not take a Chinese passenger back to 
China unless permitted by these six companies. That system they had 
for years, and I presume they have it now. 

The Chairman. Is there a general couflict between the Chinese popu- 
lation and all other nationalities in this city ? 

Mr. Pickering. Yes, sir. 

The Chairman. Is that conflict confined to laborers ? 

Mr. Pickering. No, sir ; the question has been gradually changing. 
I recollect that seven or eight years ago there was hardly anybody in 
my own office who did not say, " Let the Chinese come. Give every- 
body a chance"; but I do not think there is one there now who will say 
so. They find that the Chinese are eating up everything. The few men 
who own large tracts of land think, as I say, that they can raise wheat 
and export it at a greater profit by the use of Chinese labor. That is all 
that there is of the question. 

The Chairman. Do you regard the tolerance of Chinese immigration 
as compatible with the safety of this State ? 

Mr. Pickering. I thinkthat Chinese immigration will not be endured 
here. I think that there would have been excesses here a few years ago 
if the best men had not used their efforts to prevent and stop any out- 
break. I think that there would have been attempts made to burn the 
Chiuese quarter. I think that our people will not endure the presence 
of the Chinese. 

The Chairman. Then you think that to tolerate Chiuese immigration 
is not compatible with the safety of the State government % 

Mr. Pickering. I know that it is not. 

The Chairman. And you think that it is incompatible with the in- 
terests of the white race on the Pacific coast J ? 

Mr. Pickering. Certainly; and it is injurious to eastern States too. 
I have no doubt that, whatever Congress may do, this question will be 
settled in a few years. According to the best of my information, there 
are now on this coast about 125,000 Chinamen. They take off, say, 75 
cents a day each. You see that no people can stand such a drain. The 
drain out of this city every month is one or two millions of dollars, and it we 
had not a constant influx of wealth in every possible shape we would be 
bankrupt. I believe that a Chinaman can live for 10 cents a day with- 
out trouble; his clothing costs him hardly anything. Almost all of it 
comes from China. Almost all his food comes also from China. They 
have got to manufacturing a good deal of clothing here now, and the 
clothing and boot and shoe market is depressed in that way. Xow, 
about rents. Men will tell you that the Chinese pay big rents here. I 
will tell you how. I can point you out houses, where Chiuamen have 
women living, which pay good rent, but I have no doubt that there are 
places in this city where, in a room of this size, fitted up with banks, 
there are 40 Chinese persons lodged. 

The Chairman. What, in your judgment, is the influence which this 
Chinese population has upon American morals and upon our standard 
of character % 

Mr. Pickering. I think that the influence of the Chinese is a good 
deal worse than the influence of African slavery was. 

The Chairman. In what way % 

Mr. Pickering. This State is becoming full of tramps who do uot 
get work, and the women do not have work. Chiuese labor demoralizes 
us in both these ways. 
H. Mis. 5 17 



258 DEPRESSION IN LABOR AND BUSINESS. 

The Chairman. Does it have a tendency to drive respectable women 
out of employment and thus to degrade them ! 

Mr. Pickering. I think so. 

The Chairman. What is the condition of labor here now; is there a 
general depression in labor ? 

Mr. Pickering. Yes, sir; a very great one. I question whether labor 
to day is much higher here than it is in Boston, New York, or Phila- 
delphia. I question whether we cannot go and hire a man just as low 
here as you can there. 

The Chairman. Is that caused in a great measure by this Chinese 
competition % 

Mr. Pickering, I think entirely so. We hear, East, that the Chinese 
have built up this State for us, and that a great deal of the labor which 
we have had here could not have been done by our own people. Now 
I do not doubt that but for our Chinese labor our population would be 
much larger than it is. Immigration has been kept out, and there are a 
great many people here who talk about going away. 

The Chairman. Is the influx of white population here diminishing? 

Mr. Pickering. Yes, sir ; sensibly. 

The Chairman. At what percentage is the influx of white population 
diminishing on account of the Chinese question ? 

Mr. Pickering. I am not posted thoroughly on that point, but I know 
that the immigration of white labor has very sensibly diminished. It is 
becoming worse and worse every year. 

The Chairman. Suppose Congress should not interfere with regard 
to the prohibition of Chinese immigration, what would be the condition 
of affairs here in this city % 

Mr. Pickering. I will quote what I heard one man say here — a very 
shrewd man — Ex-Senator Gwyn. A gentlemen said to him that he had 
no doubt in his own mind that the thing would result in bloodshed if 
there was not something done by the National Government, and Senator 
Gwyn said, "One of two things will take place if the Chinese immigra- 
tion keeps coming. This State and country will be controlled by Chi- 
nese. They will get ahead. Chinese immigration has either got to be 
stopped or our people will make a commotion and drive them out by 
force." I think it will come to that. 

The Chairman. And that would be a conflict not between the laborers 
and the Chinese, but between all classes and the Chinese? 

Mr. Pickering. It would "have to be a conflict between all classes 
and the Chinese. 

The Chairman. You think that there is as much hostility between 
the Chinese and business men as there is between the Chinese and labor- 
ing people"? 

Mr. Pickering. I think so. The merchants have been the last to 
realize it, but I think that nearly all of them understand now that their 
business is falling off because the laboring men cannot earn money to 
buy. 

Mr. Cowgill. I observe all through your statement that you say.you 
have no doubt that things will be so and so. What we are seeking is 
facts. We do not want speculations or notions founded on hearsay. 
You said, in answer to a question by the Chairman, that you had no 
doubt that the tendency of the Chinese was to debauch our youth. 
What do you mean by that? 

Mr. Pickering. I mean the Chinese women here who are hired by 
the month, and who sit in the doorways to draw in young boys and de- 
bauch them. 



DEPRESSION IN LABOR AND BUSINESS 2o9 

Mr. Cowgill, Is not the proportion of Chinese women here very 
small as compared with the male Chinese population ? 

Mr. Pickering. Yes. 

Mr. Cowgill. About what is the proportion % 

Mr. Pickering. I would not be surprised if there was in the Chinese 
quarter a thousand of these Chinese prostitutes. 

Mr. Cowgill. Do you not know it to be a fact that there are prosti- 
tutes in all large cities, even where there are no Chinese? 

Mr. Pickering. Certainly. Anybody who goes around in the Chinese 
quarter can see these Chinese prostitutes. I have been in pretty low 
places. I have been through almost all the purlieus in Paris and Lon- 
don ; but I never knew, except here in Chinatown, of women taking in 
boys for 10 cents. That is common talk, and I believe that it is true. 
I have had boys tell me so repeatedly, and I have no doubt that it is true. 

Mr. Cowgill. In regard to the Chinese having laws of their own by 
which they are governed here, what is your information on that sub- 
ject ? Is that a matter of conjecture with you, or do you know of the ex- 
istence of something of that kind ? 

Mr. Pickering. 1 think I absolutely know it.' I can bring proof of 
women having been bought and sold, and this is certainly not done 
under our laws. 

Mr. Cowgill. That may have been done without any law on the sub- 
ject. What we want to know is, whether the Chinese have any code or 
system of law by which they are governed and by which their action is 
controlled, independently of the laws of this country. 

Mr. Pickering. You cannot expect me to be able to read the Chinese 
code, but if I see a contract made that a steamship company cannot 
take a Chinaman back to China, or a contract that a woman is to pros- 
titute her body for so much a month, that is as positive proof as you can 
get that they have a system in violation of our laws. 

Mr. Cowgill. Does that prove that they have a law or rule on the 
subject ; or does it not simply prove that there are some women so low 
and debased as to make a barter of their persons for vile purposes ? 
Have they certain established and well-defined rules by which they are 
governed in regard to these matters ? 

Mr. Pickering. I have no doubt of it whatever. But if you ask me 
whether I can read Chinese and swear to that, I must say no. 

Mr. Dickey. Can you state that this is a Chinese custom which they 
bring with them f 

Mr. Pickering. Why, certainly. Everybody knows that they have 
a system of plurality of wives. 

Mr. Cowgill. In regard to the worship of idols, is it not a fact that 
almost all religious denominations have different modes of worship, and 
that some of them have images in their churches and all that sort of 
thing % The Chinese may be somewhat more peculiar than some of the 
rest, but have you not observed these peculiarities in almost all denomi- 
nations? 

Mr. Pickering. I know that all denominations have different views 
about that matter, but I never yet saw any people but the Chinese take 
out roasted hogs and chickens to feed the departed. 

Mr. Cowgill. I understood you to say that you had no doubt that 
the country is being drained by from one to two million dollars a month 
by the Chinese. What data have you to base that opinion upon? 

Mr. Pickering. I see about how much wages they make on the aver- 
age, and I see how much it takes to maintain them. 



260 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Dickey. And that is the ground on which you conclude that they 
drain the country of from one to two millions of capital every month ? 

Mr. Pickering. We see the shipment of their silver and everything 
from this coast. 

Mr. Cowgill. Can you tell how much these shipments amount to? 

Mr. Pickering. I can get you the statistics here. All these ship- 
ments take back more or less. 

Mr. Cowgill. Then it is a conclusion which you have drawn from 
your observation of their industry and econornv, coupled with other 
facts? 

Mr. Pickering. The misfortune is that the people in the east do not 
know what we know here. 

Mr. Cowgill. You stated that you believed that the country was be- 
coming full of tramps because of Chinese labor here. How does it hap- 
pen that the country far east of here, where there are no Chinese, has 
been much fuller of tramps for a long time than this coast has been ? 

Mr. Pickering. We have got a wonderfully rich country. If we had 
not, the country would have been drained long ago. Our men never 
had trouble before in getting work. Our State is capable of a drain 
which would utterly bankrupt an eastern State. Silver and gold is 
coming in here continually. We can keep paying it out and paying it 
out, and still we have enough, but we have got the price of everything 
put down except wheat and wine. 

Mr. Cowgill. I understood you to say that the Chinese labor had 
reduced the prices of agricultural products, and you spoke particularly 
of potatoes. Is not the fact that subsistence is cheap calculated to 
foster manufacturing rather than to retard it? 

Mr, Pickering. It would seem, perhaps, to a stranger, that way. 
About ten years ago there came an Englishman here, a very intelligent 
man. He came into my office wanting employment. He was a good 
writer, and I set him to work. He is here now. A few days afterwards 
he was struck with the facilities that we had here for manufacturing, 
and he said, " If we put the Chinese at manufacturing work, we can 
flood the east and break down their manufactures." I said to him, 
u You would break us all down. If you get in Chinamen enough for 
that, there will not be anything left for us." He was very strenuous 
in his endeavors that I should let his writings on the subject be pub- 
lished, but I would not let them in the paper. This man said to me a 
week ago, u I am surprised that I was so deluded when I came here first. 
I believe now that our own country is to be made up with our own peo- 
ple. I do not believe it necessary for us to import servile labor of any 
kind. I never believed that the South could not get along without 
slaves, nor am I a believer now in the big farmers of this State having 
the privilege of farming their land with what is as bad and even worse 
than African slaves. The negroes kept the financial question right, but 
the Chinese do not." 

Mr. Cowgill. The chairman asked you whether it was not a fact 
that the tendency of Chinamen here was to degrade and debase the 
white women of the State. How do they do that? The white women 
do not associate with these Chinese, do they ? 

Mr. Pickering. No ; but if our women can all get employment, it 
keeps them away from demoralization ; but women are here, and they 
cannot get employment, and what can they do ? No American woman 
is willing to go into families as a domestic servant. Irish women do 
ithat; but the system of female domestic service is nearly all broken 
clown here. . 



DEPRESSION IN LABOR AND BUSINESS. 261 

Mr. Cowgill. Then it is because the women will not work for wages 
that they are out of employment ? 

Mr. Pickering. O, no; if you go to a European city — Paris, for in- 
stance — you will find women at every kind of work there; but it is very 
hard for poor women to make a living, and when they have nothing to 
live on the result has been detrimental. 

Mr. Cowgill. But women here can get fair wages — 815 a mouth, if 
they take it. 

Mr. Pickering. Yes ; I think they can. 

Mr. Cowgill. Do yo.u not know that women do not get more than 
$S or $9 or $10 a month in other parts of the country as domestic ser- 
vants? » 

Mr. Pickering. Women's wages are going down here also. 

Mr. Cowgill. Then I understand this to be the injury which you 
think the presence of Chinese here works — that it has a tendency to 
make women believe that labor is degrading, and that therefore they 
will not engage in it? 

Mr. Pickering. That is one of the causes, but it is not all of the 
causes. 

Mr. Cowgill. Then what is the other cause? 

Mr. Pickering. It is surprising how this question is perverted in the 
east. 

Mr. Cowgill. How does Chinese immigration degrade female labor 
here? 

Mr. Pickering. The Chinese are always willing to work for a little 
less wages than white people, and I suppose that if these women would 
take all the places now at $15 a month, the Chinese would offer to take 
them at $12 a month ; and if the white women offered to take them at 
$12 a month, the Chiuese would offer to take them for $10 ; and when 
the women got to $10 a month, the Chinese would do the work for $8 a 
month. 

Mr. Dickey. Do these Chinamen who compete with female labor 
work for less wages than white females can live on decently ? 

Mr. Pickering. Always. 

The Chairman. Does not Chinese labor drive white women out of 
work in the manufacturing shops because the Chinese will do the work 
for what white women cannot live on ? 

Mr. Pickering. I think it does. The Chinese manufacture shoes 
here, and retail dealers will think that they cannot get their work done 
by white men, and they will buy these Chinese made shoes to sell. I 
think that any persons intending to come here from the east had better 
stay where they are, rather than come in competition with Chinese labor. 
The evil is becoming greater every day. The question was asked here, 
what would be the result if the Chinese were made voters? I will tell 
you what the result would be : they would sell their votes to whoever 
would pay most for them. 

Mr. Martin. I understood you to say th it Chinese immigration keeps 
out white immigration. 

Mr. Pickering. I think so. 

Mr. Martin. And you think that if this influx of Chinese continues 
it will finally result in bloodshed ? 

Mr. Pickering. J think so, unless Congress does something in the 
matter. 

Mr. Martin. What kind of a law would you have Congress pass to 
prevent Chinese immigration? 



262 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Pickering. The law that the last Congress passed would be suffi- 
cient. 

Mr. Martin. That would be to limit Chinese immigration ? 

Mr. Pickering. Yes; my notions have not changed on this subject. 
When the Chinese question first began here I was interested in it, and 
I have written a thousand articles upon it. I feel very decided upon it. 
I think that Chinese immigration, if kept up, will be the ruin of this 
coast. 

Mr. Dickey. Is there any class of American citizens or of naturalized 
citizens who favor Chinese immigration ? 

Mr. Pickering. None, except those who have large tracts of land. 

Mr. Dickey. If the law was so changed that the Chinese might be- 
come naturalized, would they become citizens? 

Mr. Pickering. Yes, sir; I think so. 

Mr. Dickey. For what purpose ? 

Mr. Pickering. For the purpose of making money. But you cannot 
make a good citizen out of a Chinaman. 

Mr. Martin. When the Chinamen come to vote, you think they 
would sell their votes ? 

Mr. Pickering. Yes. 

Mr. Martin. Are you a native of an Eastern" State ? 

Mr. Pickering. I am a notive of New Hampshire. 

Mr. Martin. Did you never know people down there to sell their 
votes % 

Mr. Pickering. O, yes ; but the evil would not be so bad as it would 
be with the Chinese. W T e have it bad enough here among the whites, 
but not so bad as that. 

Mr. Martin. Do the whites sell their votes here ? 

Mr. Pickering. We think that they do sometimes. 

Mr. O'Connor. What proportion of the State and city taxes do the 
Chinese pay f 

Mr. Pickering. I do not believe that they pay one-thousandth part. 
They hardly pay any taxes. 

Mr. O'Connor. They have monopolized the laundry business, have 
they not % , 

Mr. Pickering. Yes. 

Mr. O'Connor. And they have driven the wonieu out of that busi- 
ness? 

Mr. Pickering. Yes. 

Mr. O'Connor. And they have also monopolized the occupation of 
house servants ? 

Mr. Pickering. Yes; there are some families now here who, out of 
principle, will not employ Chinese servants, but with these exceptions 
all the families employ Chinese servants. 

Mr. Martin. Why do they prefer the Chinese % 

Mr. Pickering. Because they can be always had a little cheaper. 
No matter what the wages of the others are the wages of the Chinese are 
always a little below. In the office in which I am concerned we employ 
altogether about 200 men. I could employ Chinamen, I presume, for 
50 per cent, of what it, costs us for white men, but we would not do it. 
Besides, this community would not allow me to publish a newspaper in 
that way. I believe if I attempted it they would tear my office down. 
That is my opinion. 

Mr. Martin. Are there no Chinamen employed in any of the news- 
paper offices? 

Mr. Pickering. Not many, I think, except, perhaps, to wash some- 
thing. 



DEPRESSION IN LABOR AND BUSINESS. 263 

Mr. Martin. And you give it as your opinion that if you were to 
publish a paper by the labor of Chinamen the citizens would tear down 
your office % 

Mr. Pickering-. I thiuk so ; I think I would not be permitted to pub- 
lish my paper in this city. Indeed I have no doubt of that fact. 

Views of Mr. John F. Schaefer. 

Mr. John F. Schaefer came before the committee. He said in reply 
to preliminary questions : I am a resident here ; I crossed the plains in 
1850, when I was but twelve years of age. We are manufacturing 
clothing in Xew York and selling it here. We also sell piece goods, 
woolens, &c. 

The Chairman. Give us your views in reference to the question of 
Chinese labor as brought into competition with your own. 

Mr. Schaefer. My views are that the Chinese are going to ruin the 
country. They will not only ruin the Pacific States, but as soon as they 
get through Here they will go to the East. I have fought for the Chi- 
nese for ten years. 1 thought that they would make good American 
citizens, that they would be like other people and would adapt them- 
selves to American customs, but I find that I was mistaken. Even the 
Chinese merchants and the Chinese millionaires who are here are just as 
much Chinese to day as they were when they came here. I know oue 
Chinaman who dresses in American clothes. He talks English pretty 
well. I said to him sometime ago, while the excitement on this subject 
was high, " Why do you not tell your intelligent people to wear Ameri- 
can clothes and to adapt themselves to American customs ? They all 
look like stuffed monkeys in their clothes. 7 ' a To tell you the truth," 
said he, '» I wear American clothes. because I make my living here, but 
the other Chinamen look upon me as a degraded slave, and they do not 
admit me into their houses and families because I wear American 
clothes." 

The Chairman. In your intercourse with them as a merchant, have 
you learned that there is any affinity or any common feeling between 
them and the American people, or whether the feeling that exists be- 
tween them is a feeling of hostility \ 

Mr. Schaefer. I do not know oue white man to-day who is in favor 
of the Chinese coming here. 

Mr. Chairman. Why % 

Mr. Schaefer. Because he has found out by experience that the 
Chinese will drive us out by starvation. It is a question of star- 
vation. I talked uot long ago to a Chinaman. I said, " Chinaman, 
you must go." He said, "Me no go; white man go." The Chinese 
drive us out by degrading labor. Even the manufacturers of cigars 
and of boots and shoes who employed them at first fiud out that the 
Chinese have taken away their business, and that the Chinese can 
sell at 25 per cent, less than they can. It is merely a matter of 
time. Chinatown is increasing, and the property of the white people in 
the vicinity is depreciating. The rich people lose much more by the 
Chinese than the poor do, on account of the depreciation of property. 
I have a good deal of property here which I cannot sell for half what it 
cost me ten years ago. 

The Chairman. Does the presence of the Chinese here prevent immi- 
gration from other parts of the United States? 

Mr. Schaefer. Most assuredly. People cannot get anything to do 
here. I know young men whe are offering to work for me at almost any 



264 DEPRESSION IN LABOR AND BUSINESS. 

price. I have got a clerk in the store whom I keep out of sympathy. 
He has the best of recommendations, and yet he works for me at $2 a 
day as clerk and bookkeeper, because he cannot get a better situation. 
I knew another man, a telegraph operator, who ran around unemployed 
for six months, and who finally went to work at $i a day in a sawmill, 
and he had to pay one of those intelligence offices to get that place. 
Last week I begged a friend of mine Jwho has a mill in the country to 
take that man, and he says that when he has a vacant place he will let 
me know. He employs seventy men. Practical miners get S3 a day, 
but they have got a society which prevents any man working under 
that rate. 

The Chairman. Is there a general depression of labor in this 
State? 

Mr. Schaefer. Most assuredly. 

The Chairman. Greater than at any other time ? 

Mr. Schaefer. Greater than it ever has been to my knowledge, and 
I have been here for the last six years steadily. People cannot get 
anything to do. 

The Chairman. Is this state of things improving or growing worse f 

Mr. Schaefer. According to my experience it is growing worse. 

The Chairman. Do you employ any Chinese in your establishment ! 

Mr. Schaefer. No, sir. 

The Chairman. Do you manufacture here any of the goods that you 
sell? 

Mr. Schaefer. We manufacture custom trade to order here. We 
manufacture principally in New York. 

The Chairman. What do you think ought to be done with the Chi- 
nese 1 

Mr. Schaefer. That is a hard question to answer. I have been 
thinking that as the people East do not know and will not learn the 
merits of the question, we ought to send all these Chinese East, and 
give the people of the East a trial of them. 1 have been always a 
steady .Republican, but this idea of wanting to sell out ^as I may say) 
our country and homes to the Chinese goes against my grain. 

The Chairman. Have you ever met with a Chinaman whom you could 
make a citizen of so that he would be creditable to the American stand- 
ard? 

Mr. Schaefer. You might just as well try to Christianize the China- 
man. A Chinaman once said to me, "If you give me four bit I will 
play to Jesus, and for four bit more I will take it all back." It is so in 
regard to Americanizing them. They will not even leave their bones 
here. They come out under contract that they shall be sent back to 
China, or if they die here that their bones shall be sent back. 

The Chairman. Then it is your conviction that you cannot make a 
civilized American out of a Chinaman % 

Mr. Schaefer. I thought at first that you could, and I have fought 
for them many a time and quarreled about them, but I find out that I was 
mistaken. As "to making them American. citizens, it is impossible. In 
different islands in the South Pacific Ocean, where the Chinese have 
been for one hundred years, the natives have had to clear them out, but 
the Chinese came back, and the natives did not drive them out a second 
time. And now the' Chinese have these countries, and there are just 
as many Chinese there as there were one hundred years ago. They 
will stick to their ideas and their religion just as long as they live. 

The Chairman. Where are the bones of the dead Chinese collected 
together ? 



DEPRESSION IN LABOR AND BUSINESS. 265 

Mr. Schaefer. They are dug out of the grave-yard. The flesh is 
scraped off their bones with scrapers when their bodies are in a decom- 
posed state. 

Mr. O'Connor. Do not your laws prevent disinterment ? 

Mr. Schaefer. Yes ; but our officials get so much from the Chinese 
that they do not see it. 

The Chairman. Are these bones of dead Chinamen scraped and put 
in boxes and barrels and sent back to China? 

Mr. Schaefer. Yes ; they are all sent back. 

The Chairman. What is the tariff on Chinese bones 1 

Mr. Schaefer. I do not know. 

The Chairman. Have you been often in Chinatown f 

Mr. Schaefer. Xo ; I have a family, and have not been there for 
the last seven years, except in the daytime. I have not been there at 
night. 

The Chairman. Do you know what Chinatown is ? 

Mr. Schaefer. Yes.^ 

The Chairman. Do you know here any French town or German town 
or English town or any other town of a particular nationality ? 

Mr. Schaefer. Xo \ only Chinatown. 

The Chairman. Chinatown is notorious ? 

Mr. Schaefer. Yes. 

The Chairman. In your judgment, Chinese labor is displacing white 
labor and making it disreputable ? 

Mr. Schaefer. Yes ; the Chinese are just ruining the country. They 
are not only ruining the Pacific States, but in less than fifty years they 
will have overrun the whole United States. They will starve out the 
white people by degrees. The English cannot live where we come, and 
the Spaniard cannot live where we come, but we cannot live where the 
Chinese come. When I came here first the Spaniards had all the 
country ; but they are not industrious and do not save, and they had 
to go. The Chinese, however, are just as much ahead of us in that re- 
gard as we are ahead of the Spaniards. There is no humbug about this 
thing; I have studied the matter out. 

The Chairman. Does the cheap Chinese labor drive respectab'e- 
women out of employment ? 

Mr. Schaefer. Most assuredly. 

The Chair m an. How j ? 

Mr. Schaefer. I never knew American house servants in my life. 
You do not find them in the cities. The house servants are all foreigners. 
Americans will do almost anything else rather than go into domestic 
service. 

The Chairman. What objection have they to it ? 

Mr. Schaefer. They object to the low wages. The Irish girls, even, 
do not agree with the Chinamen, and do not want to be where Chinamen 
are. 

The Chairman. Unless Congress agrees upon some legislation to pro- 
hibit this immigration, what will be the result ? 

Mr. Schaefer. My opinion is that if this thing happened in any other 
country where there was but one nationality there would have been a 
revolution long ago ; but here we stand almost anything. One says it is 
the damned Irishmen ; another says that it is the damned Dutch, or the 
damned Americans. I do not want to rebel against the government, bat 
rather than be driven out of my home and give up the country to the 
Chinaman, I would surrender almost anything. I have a good deal of 
property here, and I do not want to be driven out hy a set of Chinese* 



"266 DEPRESSION IN LABOR AND BUSINESS. 

If we cannot get protection from the United States Government, we will 
have to take the law in our own hands. 

The Chairman. Is the existence of the two races together incom- 
patible ? 

Mr. Schaefer. They never can agree together unless we turn China- 
men. 

Mr. Dickey. You said that you had been for a number of years in 
favor of Chinese immigration. 

Mr. Schafer. Yes. 

Mr. Dickey. Did you at that time employ Chinese labor ? 

Mr. Schaefer. No; but I thought that the Chinese were industrious 
men, and I thought that they wouid settle down and make good Ameri- 
can citizens. I would not see a Chinaman abused. 

Mr. Dickey. Then it was because of your philanthropic idea that 
this was an asylun for the rest of the world that you then favored the 
Chinese ? 

Mr. Schaefer. Yes ; that is the way I felt about it. 

Mr. Dickey. But your experience 

Mr. Schaefer. Has taught me differently. 

Mr. Martin. You say that you have property here which you can not 
sell for half that you could have sold it for ten years ago ? 

Mr. Schaefer. Yes. 

Mr. Martin. Do you attribute that depreciation to the fact of China- 
men being here? 

Mr. Schaefer. Yes. 

Mr. Martin. Has there not been a depreciation of property all over 
the United States'? 

Mr. Schaefer. Yes. 

Mr. Martin. What caused that depreciation everywhere else ? 

Mr. Schaefer. The inflation of the currency while we had all the 
gold here. 

Mr. Martin. Do you consider the depreciation of your property at- 
tributable to the presence of the Chinese here I 

Mr. Schaefer. Most assuredly. If we had white immigration here 
property would soon improve. 

Q. And you also think that the labor depression in the State of Cali- 
fornia is owing to the presence of Chinese ? - 

Mr. Schaefer. Most assuredly. 

Mr. Martin. And to no other cause ? 

Mr. Schaefer. There may be some other causes, but they do not 
amount to anything. I believe, for instance, that the existence of large 
landed estates here that do not pay taxes is another cause. 

Mr. Martin. Do not these large estates pay taxes % 

Mr. Schaefer. Not sufficiently. The cultivated parts of the land 
pay taxes, but not the uncultivated parts. Heretofore it made a con- 
siderable difference whether a person had a large tract of land or a 
small tract. I have a tailor working for me, and he and his brother-in- 
law have 100 odd acres across the bay. There is another party near 
them who has about 60,000 acres all around. The man who lives on the 
top of the hill, and who has 100 acres, is assessed $8 an acre taxes for 
liis land, while this other party who has 60,000 acres of land, and whose 
land is worth $100 an acre, is assessed $4 an acre. But now our new con- 
stitution will settle all that. The worst of all is the Chinese question. 

Mr. Martin. And you think that Congress ought to pass a law pro- 
hibiting Chinese immigration ? 

Mr. Schaefer. Yes. If we were to drive the Chinese East, it would 



DEPRESSION IN LABOR AND BUSINESS. 267 

only hart the lower class of laborers there. That is how it was here at 
first, but then the Chinese began to injure the mechanics and the mer- 
chants and the property-holders. 

Mr. Martin. Then do I understand you to say that so long as the 
injury was confined to the laboring classes you did not care so very 
much about the Chinese ? 

Mr. Schaefer. When it did not hurt our pockets we did not care so 
much for the poor laborer. Half of this population at first was in favor 
of the Chinaman, but now they find that every one suffers. The farmer 
and the mechanic and the property-holder all suffer equally. 

Mr. Martin. When the shoe began to pinch, then they squealed out? 

Mr. Schaefer. Yes. Now you fiud everybody against the Chinese, 
except a very few, perhaps. I think that even Mr. Stanford himself 
would be glad to get them out of the country. The railroads can be 
built with Chinese labor, but after they are completed there is no one to 
ride on them. 

Views of Dr. C. C. O'Donnell. 

Dr. C. C. O'Donnell came before the committee. He said in reply 
to preliminary questions: I have been a resident of this city for nearly 
thirty years. I have been a practicing physician. 

The Chairman. For what part of the time have you lived in the 
neighborhood of the Chinese quarter ? 

Dr. O'Donnell. About twenty- two or twenty three years. 

The Chairman. Describe it to us. 

Dr. O'Donnell. 1 have no language to describe the horrors of China- 
town 5 it is impossible to describe it. 

The Chairman. About what number of Chinese are there in the 
town '? 

Dr. O'Donnell. Between California and Pacific streets and between 
Stockton street and Kearuev street, about five blocks, there are about 
32,000 or 33,000 Chinese. 

The Chairman. Give us an idea of the area of those two blocks ? 

Dr. O'Donnell. It must be inside of 20 acres, I think. I should say 
from 10 to 15 acres. 

The Chairman. What proportion of the 33,000 are men, women, and 
children ? 

Dr. O'Donnell. I think that there are somewhere about fifteen men 
to one woman. 

The Chairman. How many of these women are married and live 
with their husbands ? 

Dr. O'Donnell. About 1 in 100 or 120. 

The Chairman. And the remaining 2,000 women, what is their social 
condition and status ? 

Dr. O'Donnell. They are prostitutes of the lowest type. 

The Chairman. Where do they live and how do they live ? 

Dr. O'Donnell. They live in cellars, most of them, underground, and 
in back alley-ways. 

The Chairman. Are they subject to diseases to a great extent ? 

Dr. O'Donnell. They are subject to all manner of diseases. 

The Chairman. Of what character ? 

Dr. O'Donnell. They have every type of syphilis, and even leprosy — 
the most horrible of all diseases known to man. I have discovered a 
great many cases of leprosy among the Chinese : and the disease is now 



268 DEPRESSION IN LABOR AND BUSINESS. 

spreading among the whites to a great extent. I have seen a great 
many white persons with leprosy caught from Chinatown. 

The Chairman. Is leprosy a branch of syphilis 1 

Dr. O'Donnell. No, sir ; it originates from filth. 

The Chairman. Give us an idea of an ordinary Chinese house. 

Dr. O'Donnell. The houses are divided into very small apart- 
ments — 6 feet by 4 or 5 feet. About fifteen Chinamen sleep in an 
apartment 8 feet by 10, and generally five to fifteen of them occupy 
double tenements. Some of the houses are three stories high and two 
stories under ground, and they are divided up into very small apart- 
ments — from 5 to 8 feet, and from 8 to 10 feet. Those that are 5 to 8 
feet accommodate from five to seven persons, and those that are from 8 
to 10 feet accommodate about ten to fifteen persons. That is a fact, 
and the authorities all know it, because what is known as the cubic-air 
ordnance was passed to get rid of that evil, but its execution was found 
impossible. 

The Chairman. How do so mauy people get into such a small space ? 
Are they in cribs or shelves'? 

Dr. ODonnell. They have shelves all around like bunks, about 2 
feet wide by 6 feet long. 

The Chairman. Are these separate families or do they all belong to 
one concern % 

Dr. O'Donnell. They work for different manufacturers ; ten of them 
go together. 

The Chairman. These are their sleeping places % 

Dr. O'Donnell. Yes, sir ; and a good many of the Chinamen work 
at night while the others sleep, and when those who sleep at night leave 
the bunks others take their places. 

The Chairman. What kind of bedding have they in these bunks? 

Dr. O'Donnell. They lie simply on a mat spread on the board, 
and over that they have some calico stuffed with wool and sometimes 
silk. 

The Chairman. A sheet is unknown with them, is it ? 

Dr. O'Donnell. I never knew of one of them having a sheet. 

The Chairman. Do they use any pillows % 

Dr. O'Donnell. No, sir. 

The Chairman. How are the two lower floors of these houses venti- 
lated f 

Dr. O'Donnell. They have very poor ventilation. Generally there is 
a little opening over the side of the door. 

The Chairman. How are these tenements lighted % 

Dr. O'Donnell. By oil-lamps. They burn coarse oil. .They lie there 
and smoke opium most of the time at nights. 

The Chairman. Where are those other houses of a disreputable char- 
acter ? 

Dr. O'Donnell. In all the by-alleys of Chinatown ; pretty nearly every 
house is a house of prostitution or a gambling-house. 

The Chairman. What is the game that they gamble at? 

Dr. O'Donnell. Tan principally, and they have lotteries. In every 
Chinese cigar store all over the city there are Chinese lotteries, which 
entice young men into gambling. Here is one of the lottery-tickets (ex- 
hibiting it). You can go in there and pay 10 cents and receive this ticket, 
and you go back the next day and are shown what the drawing has 
been. You examine this and you compare it with the ticket that you 
received, and if you happen to catch five spots in a row you get 20 cents, 
and if you catch seven spots in a row you get $2.50. Such lotteries are 



DEPRESSION IN LABOR AND BUSINESS. 269 

to be fou ml in every cigar establishment. Young men walking around 
generally go into one of these places and try to win a little something, 
and maybe one of them in a hundred may win a dollar or two. 

The Chairman. It has been represented here by some witnesses that 
Chinese prostitutes debauch young white boys. Do you know anything 
on that point ? 

Dr. O'Donnell. Yes; they do. Their contaminating influence on boys 
and children is worse than anything else. They stand in the doorway 
and call in little boys of all ages from twelve to eighteen, I have every 
mouth from five to twenty boys coming to me with those vile diseases, 
gonorrhea and syphilis, caught in those places. They have a little 
square opening in the wail, close by the door, and they sit there and try 
to coax persons passing by to go in. They prostitute themselves to 
children for 10 to 15 cents. 

The Chairman. Is that carried on to any great extent ? 

Dr. O'Donnell. Yes, to a great extent. When boys come to me as 
patients I ask them where they caught the disease, and they tell me. 

The Chairman. What are these pictures that you have brought into 
the room ? 

Dr. O'Donnell. They are pictures of cases of leprosy. These are 
cases of leprosy which I found engaged in making cigars underground. 
This fellow (indicating) has been engaged in making cigars here for 15 
years. If you should happen to get one of the scales on your skin, you 
would be sure of catching the leprosy, and there is no cure for that dis- 
ease. These scales are infectious. I got all of these specimens out of one 
establishment, where they had been in one room for five years. They 
live underground about two stories deep. They burrow like rats. 

Mr. Dickey. Do the dealers in cigars here purchase cigars made by 
these fellows % 

Dr. O'Donnell. There are some finer looking fellows who peddle the 
cigars made by them. These fellows are not allowed to come outside. 
This man (indicating one of the pictures) told me that he never saw the 
sun in the daytime. They never come out in the light of day. It is 
always in the nighttime that they come out. I have seen a good many 
white men with leprosy. 

Mr. Martin. Are the cigars that are made by these fellows shipped 
to the East % 

Dr. O'Donnell. I hope so. I hope they are shipped out of this State. 

The Chairman. Is the shop in which these men are employed in ex- 
istence to day? 

Dr. O'Donnell. We sent these men back to China. There is no cure 
for the disease. 

The Chairman: And you say that white men get it occasionally ! 

Dr. O'Donnell. Yes; I can show you three or four cases today in 
San Francisco. It is spreading very rapidly, but the disease takes four 
or five years to develop itself. It begins with an itching sensation. I 
have gone in company with the board and with the supervisors to China- 
town, but they would never go into more than four or five houses. They 
would say that they had seen enough. 

The Chairman. Are the Chinese in the habit of sending for you pro- 
fessionally % 

Dr. O'Donnell. They have come to my place, but I have turned them 
out immediately and have told them that there was no cure at all for 
them. 

The Chairman. Have you any idea that the persons represented in 
these photographs would make good reputable citizens? 



270 DEPRESSION IN LABOR AND BUSINESS, 

Dr. O'Donnell. I never say a Chinaman yet who, in my opinion-, 
would make a good American citizen. 

The Chairman. In your long intercourse with them, have you ever met 
any of them who has abandoned his religious ideas I 

I)r. O'Donnell. I never did. 

The Chairman. Have you ever been in their places of worship ? 

Dr. O'Donnell. Frequently. 

The Chairman. Give us an idea of them. 

Dr. O'Donnell. The place of worship is in one of these back alleys. 
It is a long narrow room and there is a kind of altar there on which are 
wooden images, which they call Joss. It is a wooden image cut out of 
a piece of hard wood and looking as much like an alligator as a human 
being. It is something between an alligator and a human being. They 
take the form of a human being and they try to deform it in every pos- 
sible shape by carving. 

The Chairman. What is the system of adoration of their gods ? 

Dr. O'Donnell. They go before them and bow and smoke. They be- 
lieve that their bodies must be buried in the celestial empire or that they 
would never go to Heaven. That is their firm belief. 

The Chairman. Have they a conception of Heaven 1 

Dr. O'Donnell. They think there is such a place as Heaven. They 
call Heaven their country. 

Mr. Dickey. Do all classes of Chinamen worship those idols ? 

Dr. O'Donnell. Yes, all classes. 

The Chairman. What day of the week have they for worship ? 

Dr. O'Donnell. The temple is open every day at all hours. 

The Chairman. Have they no Sunday ? 

Dr. O'Donnell. None whatever. 

The Chairman. Are there always Chinese people in this place of 
worship ? 

Dr. O'Donnell. Yes; always. 

The Chairman. Have they a priest there ? 

Dr. O'Donnell. They have some high joss there — the great I am. 
He is considered the high judge, and he pronounces sentence mostly on 
those who commit crimes or who happen to do anything to injure the 
principal men or merchants. 

The Chairman. Have they a court for the administration of justice?' 

Dr. O'Donnell. Yes; they have their private tribunal. 

The Chairman. What crimes are cognizable before that court, accord- 
ing to their customs % 

Dr. O'Donnell. In case a Chinaman gives any testimony contrary to 
the will of that people he is ordered to be shot or killed. They have 
their executioners whom they call " high binders." 

The Chairman. Who are they % 

Dr. O'Donnell. They are men covered with a kind of armor made of 
steel wire which cannot be penetrated by bullet or knife ; and these men 
are bound to carry out any judgment of that court. 

The Chairman. What penalties does that inflict % 

Dr. O'Donnell. The death penalty for certain crimes. 

The Chairman. Do you know of instauces where the sentence of that 
court has been carried out ? 

Dr. O'Donnell. Yes; that is well known by the authorities of the 
State. 

The Chairman. And do the criminal authorities of the State pay no* 
attention to the matter % 

Dr. O'Donnell. It is a hard thing to bring them to light, for when- 



DEPRESSION IN LABOR AND BUSINESS. 271 

ever witnesses are brought before tbe six Chinese companies they will 
go right back on their words and will not reveal anything. They would 
not dare to swear against one another. 

The Chairman. What other punishment besides death is inflicted by 
sentence of this court ! 

Dr. O'Donnell. Whipping. I have seen men and women whipped 
and pursued and nearly killed. I have been called upon several times 
to see women who had been beaten nearly to death. 

The Chairman. With what ? 

Dr. O'Donnell. With clubs and sticks. They also use dull-pointed 
instruments and probe them. I havebeen in places where these Chinese 
had a room, a long place underground about 200 feet under the side- 
walk, and if any one of them dies there, and if they cannot get a physi- 
cian to give a certificate of death, they throw the dead body right in 
there, and after a time they remove the flesh off the bones, throw the 
flesh into the sewer, and ship the bones home to China. You never see 
the funeral of a Chinese child in this city. 

The Chairman. What is the offense that is punished among them by 
the death penalty! 

Dr. O'Donnell. Revealing any of the secrets of the orders of the 
Chinese court. That is what they have told me themselves. 

The Chairman. What other offenses are esteemed by them as worthy 
of punishment other than the punishment of death % 

Dr. O'Donnell. They have got their own prison. They are put into 
dark cells and some of them are starved to death. 

The Chairman. Do you know of any instances where death has been 
produced among them by starvation % 

Dr. O'Donnell. Yes, sir, many instances. 

The Chairman. How do you know that fact ! 

Dr. O'Donnell. Because I have gone to their hospital and have seen 
them lying there, and they have told me that they had nothing to eat 
for three or four days. When a Chinaman is very sick and when they 
expect him to die they send him right to hospital without anything, 
even without clothing. 

The Chairman. Is their hospital over ground or undergorund % 

Dr. O'Donnell. Some above ground and some below ground. They 
are old shanties, dirty old places, where white men would be afraid to 
penetrate. 

The Chairman. What is the food of Chinamen ? 

Dr. O'Donnell. Mostly rice, which they ship from their own country. 
From what I can understand from the six Chinese companies themselves 
Chinameu can live at from 3 to 8 cents a day. 

The CHAIR3IAN. Do those people who have the disease of leprosy ex- 
press any desire to get rid of it, or do they submit to it as a part of their 
destiny 1 

Dr. O'Donnell. They just submit to it; they know that there is no 
cure for them. It is not the best class of Chinamen who come here, but 
the low-river pirates who live outside of the walls. There may be a few 
independent Chinamen who come here, but most of them are shipped 
from Hong Kong, and are the lowest type of river thieves and pirates. 
When a steamer arrives from China I generally go down and have a 
conversation with the captain and mate. When the ship Crocus arrived 
here three or four years ago, I visited her to see if there was any small- 
pox on board, and in a conversation with the captain he said that it was 
almost impossible for him to bring the ship in, as the Chinamen that he had 
on board were all pirates, and that he had to increase his crew and to keep 



272 DEPRESSION IN LABOR AND BUSINESS. 

red hot pokers ready so as to keep the Chinamen in subjugation. The 
mate also told me the same thing. That vessel brought over somewhere 
in the neighborhood of 800 Chinese. I was going down the street in my 
buggy when I saw one of these Chinamen come off the vessel. He had 
the small-pox. I drove up to him, stopped my buggy, and saw that it 
was a case of smallpox. I then went down on board the steamer to 
know if there were any more such cases there, and then it was that I 
gained this information. I found that it was no use, as these people al- 
ways make their way to Chinatown. 

Mr. O'Connor. Can leprosy be communicated otherwise than by 
touch ? 

Dr. O'Donnell. Only by touch. A few years ago one of the ablest 
jurists in this State died with leprosy, and he said that he caught it by 
taking a seat after one of these lepers got up out of it. 

Mr. O'Connor. Have the Chinese inoculated any of your citizens with 
leprosy % 

Dr. O'Donnell. Yes ; I have had several call upon me, and have ad- 
vised them to be inoculated with syphilis for the purpose of stopping the 
leprosy. I had an idea that the introduction of syphilis into a person 
affected with leprosy would stay the progress of the leprosy. 

Mr. O'Connor. The syphilis being preferable to the leprosy % 

Dr. O'Donnell. I should so consider it because there is no cure for 
the leprosy. I think, however, that the virus from a coolie in syphili- 
tic pus introduced into a white person is certain death. I have never 
seen a person or child recover who had got the syphilis from a China- 
woman. It is a good deal worse than syphilis caught from a white per- 
son. We have in the neighborhood of 185,000 Chinamen in the State of 
California. We have 76,000 of them working here. 

Mr. Dickey. These hospitals that you spoke of — are they Chinese 
hospitals % 

Dr. O'Donnell. Yes. 

Mr. Dickey. Have they physicians in them % 

Dr. O'Donnell. Yes. 

Mr. Dickey. What is the mode of treatment ? 

Dr. O'Donnell. Teas of various kinds, and they use alcohol with dif- 
ferent vermin — snakes, &c. Most of the Chinese doctors administer 
that. A Chinese doctor left me a lot of drugs which he generally used, 
and, he said, very successfully. They were snakes of various kinds put 
up in alcohol. They mix that with tea and give it for certain diseases. 

Mr. Dickey. That is, they administer the alcohol after being in the 
bottle with the snakes % 

Dr. O'Donnell. Yes ; Chinese physicians have made me presents of 
such medicine, and told me how they used it, and that they used it very 
effectually in certain diseases. They give about a teaspoonful of this 
liquid. 

The Chairman.* Do you know anything about the contract system 
under which Chinese prostitutes are brought and kept here f 

Dr. O'Donnell. Yes, sir. They are contracted for in Hong-Kong. 
They come here and live this life of prostitution for so many years, for 
such an amount. 

The Chairman. Who make these contracts? 

Dr. O'Donnell. The six Chinese companies. That is the greater 
part of their trade. 

The Chairman. Do you know anything as to the usual terms of these 
contracts — the money consideration % 

Dr. O'Donnell. Yes. I have doctored a great many Chinamen and 



DEPRESSION IN LABOR AND BUSINESS. 273 

women. I used to hare a very large practice among them. They say 
that the women get from $1.25 to $1.50 a month. They work for so 
long a time for that amount. 

The Chairman. What becomes of the money which these women earn 
in that occupation ? 

Dr. O'Donnell. It is handed over to these six Chinese companies by 
the men to whom they hire these women. 

The Chairman. Then the companies hire out these women for prosti- 
tution, and the women hand over the proceeds to the men who hire them, 
and the companies are paid the amount agreed upon ? 

Dr. O'Donnell. Yes. The six Chinese companies appoint a certain 
number of old women who take charge of these prostitutes. Their age, 
when they come here, ranges generally from ten to fifteen and as high 
as twenty years. They are generally very young. 

The Chairman. Do they come here in a healthy state ! 

Dr. O'Donnell. Generally. Some of them whom I have seen have 
been very healthy ; but almost all of them are diseased now. 

The Chairman. Do they contract the disease after they come here? 

Dr. O'Donnell. I do not know. I know that the greater part of 
them are diseased at the present time. 

The Chairman. Does that disease assume a fearful shape and condi- 
tion f 

Dr. O'Donnell. Yes. 

The Chairman. Does it often produce death ? 

Dr. O'Donnell. Y~es. 

The Chairman. Is there no cure for it? 

Dr. O'Donnell. There is a cure for it ; but these women do not pay 
much attention to it. They allow it to run. They inoculate young boys 
with the disease, and it spreads in that way. Young white boys with 
10 or 15 cents go there and satisfy themselves. They are decoyed in 
and catch the disease, and they go out and spread it among white women. 

Mr. Dickey. Who constitute these six Chinese companies % Are they 
separate organizations that import Chinamen to this country ? 

Dr. O'Donnell. The companies are in China. Those that are here 
are the agents for the companies 

Mr. Dickey. And there are six different agencies here ? 

Dr. O'Donnell. There are eight of them now. I did know the names 
of them all. 

Mr. Dickey. How long ago did they increase the number of agencies 
here from six to eight ? 

Dr. O'Donnell. Within the last four years. A few days ago I got 
hold of a Chinaman named Wo Wing : a very intelligent Chinaman. 
He said that he had been a slave to the Ching Wong Company for six 
or eight years, and that he thought he would be shortly free. I got to 
questioning him as to how he had been brought here, and whether all 
the Chinamen who were brought here were slaves. He said that they 
were all brought here the same as he was. I asked him if I could get 
him to give that testimony before the court. He said he would be afraid 
to do so; that if he did they would kill him instantly. I said that I 
would protect him if he would give that testimony. He said that every 
Chinaman who came here came pretty much as a slave to thes^ six com- 
panies. I asked him would he swear to that, and he said that if he 
would they would surely kill him. I said, u Why ! " He said, " These 
fellows whom they call "high-binders" have told me how they were 
dressed, and that for $L they would kill anybody whom they were 
ordered to kill." I told him that I would see that he would be well 
H. Mis. 5 18 



274 DEPRESSION IN LABOR AND BUSINESS. 

protected if he would give correct testimony in regard to how he got here, 
and that I would guarantee that they would not kill him without killing" 
me. Finalty he consented to give his testimony, and I went before an 
attorney of the circuit court, Mr. Van Dusen, to get him to take this 
testimony, and to have the Chinaman sent to Alcatraz to be kept there 
until the trial came on. I had another Chinaman and I wanted to have 
the two sent to Alcatraz until the trial. Mr. Tan Dusen told me to call 
again at twelve o'clock and that he would give me a warrant for the ar- 
rest of the six Chinese companies after having the testimony taken be- 
fore a justice of the peace. I went back at twelve o'clock for the war- 
rant, but it appeared that the six Chinese companies, with their bonds- 
man, Colonel Bee, were there a minute after the warrant was issued. I 
went back to my office to serve the warrant, and I told my office 
boy, a very quiet sort of a boy, not to let a single person speak to 
these other Chinamen. But immediately after I left the office two 
Chinamen got into my back room (how they got there I never could 
tell) and they immediately took this Chinaman right off to the com- 
pany. I went for him afterwards and he said he would not come. They 
are afraid to reveal any facts. This Chinamau said to me that if he did 
such a thing he would be sure to be killed. 

Mr. Dickey. How many of these armed men are there who wear 
this net- work of wire? 

Dr. O'Donnell. There are nine to each of the tribunals. 

Mr. Dickey. What kind of armor is it that they wear? 

Dr. O'Donnell. It is wire-woven work. 

Mr. Dickey. Do they wear it all the time? 

Dr. O'Donnell. All the time. I got this Chinaman to describe it to 
me particularly. 

Mr. Dickey. You have seen it yourself, have you not ? 

Dr. O'Donnell. Yes ; I have seen the way it is made. 

The Chairman. And these men who wear it are executioners ? 

Dr. O'Donnell. Yes ; every week there are eight or ten deaths of 
Chinamen advertised in the newspapers, disease unknown. The Chinese 
do not dare to publish what the disease is. They go to a physician 
sometimes, and give him $2.50 to sign a certificate that such a China- 
man died, disease unknown. My opinion is that in such cases the 
disease is leprosy, because I have seen a great many cases of death 
from leprosy among them. 

Mr. Cowgill. Is it a common thing for physicians here to give such 
certificates ? 

Dr. O'Donnell. Yes ; it is a common thing. 

Mr. Cowgill. To give a false certificate for $2.50? 

Dr. O'Donnell. Yes. 

Mr. Cowgill. Will physicians give a certificate without knowing, 
anything about the case? 

Dr. O'Donnell. Yes; Chinamen have often come to me, and said to 
me, " Doctor, I would like you to sign this certificate," laying down 
$2.50. 

Mr. Cowgill. Do you do it? 

Dr. O'Donnell. No, sir; I do not do it. 

Mr. Cowgill. But there are other physicians who do it ? 

Dr. O'Donnell. Yes, sir. 

Mr. Cowgill. Do all of them do it ? 

Dr. O'Donnell. I suppose so. 

Mr. Cowgill. And that is the character of your physicians here? 

Dr. O'Donnell. Yes, sir. These physicians will not go to Chinatown. 



DEPRESSION IN LABOR AND BUSINESS. 2T. r ) 

Our health officer stated here once in his testimony that he had not 
been in Chinatown in eight years. 

Mr. Cowgill. Do 3*011 state it as a fact to this committee that the 
principal physicians of this city, or nearly all of them, will give certifi- 
cates of that kind for a fee of $2.50 1 

Dr. O'Donnell. Yes, sir; I know that they do it. 

Mr. Cowgill. Xearly all of them ? 

Dr. O'Donnell. Yes, sir; Chinamen have come to me with certificates 
to sign. I would not sign, and then they have gone to other physicians 
and got them to sign. 

Mr. Cowgill. And you are the only exception ? 

Dr. O'Donnell. I have signed certificates of death, but I generally 
know what the disease is. 

Mr. Cowgill. So far as you know, are you the only physician in this 
city who will not give certificates of this kind for a fee ! 

Dr. O'Donnell. I did it. 

Mr. Cowgill. For a fee ! 

Dr. O'Donnell. Yes; I go and examine and ascertain as nearly as I 
can what the disease was. 

Mr. Cowgill. And you say that the others do not do that ? 

Dr. O'Donnell. If you read the newspapers you will see that there 
are ten or fifteen cases of deaths in Chinatown every week, disease un- 
known. 

Adjourned till to-morrow at eleven o'clock. 



San Francisco, Cal., 

August 16, 1879. 
Views of Joseph C. Gorman. 

Mr. Joseph C Gorman came before the committee as a volunteer 
witness. He said, in reply to preliminary questions, I am a resident of 
San Francisco ; 1 have resided here eleven years ; I have been a tinner, 
and a surveyor, and engineer on a railroad ; 1 was four years surveying 
on the railroads ; I am engaged in the tinning business. 

The Chairman. State what effect the presence of the Chinese has 
upon your trade and occupation f 

Mr. Gorman. In one part of my trade the effect of Chinese competi- 
tion is very little, because the work is too hard for them ; but iu other 
parts of it where the work is light they can do it so much cheaper than 
white men can (having no families and living so cheaply) that we can- 
not compete with them at all. They can do it in canniug factories, for 
instance. On the Columbia Eiver there are several thousand Chinamen 
employed in that work, and they do it so much cheaper than white men 
can live for that we cannot get employment in that business at all. 
That is 600 miles north of San Francisco. I think that two thousand 
would be a low estimate for the number of Chinamen employed there. 

The Chairman. Were you in business there? 

Mr. Gorman. Not for myself. I was surveying on a railroad and 
could see the operation of this Chinese competition there. I was sur- 
veying there from 1370 to 1874. On that railroad there were from 
twelve to fifteen hundred Chinamen employed. That was in Washing- 
ton Territory. There was another railroad building in Oregon where 
Chinamen were also employed. I suppose that at a low estimate there 



276 DEPRESSION IN LABOR AND BUSINESS. 

were from six to eight thousand Chinamen employed on that occasion; 
some of them got $26 a month and found themselves. Of course a white 
man could make but very little money at such' wages. White men 
where they were employed got from $35 to $40 a month ; but very few 
of them were employed. 

The Chairman. Did you find white men out of employment in conse- 
quence of that Chinese competition 1 

Mr. Gorman. Yes ; you could get hundreds of white men all the 
time. 

The Chairman. Could they find employment ? 

Mr. Gorman. No sir. 

The Chairman. Could they have procured employment if they had 
reduced their wages to the Chinese standard ? 

Mr. Gorman. It did not seem to me that they could. It seemed as if 
there had been a contract made by Chinese merchants in Portland to 
furnish so many Chinese laborers. These merchants dealt in Chinese 
stores, which all these Chinamen had to use, so that the merchants 
were making money in both ways. 

The Chairman. In what other localities did you observe this state of 
things? 

Mr. Gorman. The same state of things existed all along the Columbia 
River. There are about 20 or 25 canneries there, and they were all over- 
stocked with Chinese. 

The Chairman. How long did you remain in that country ? 

Mr. Gorman. Four years. This was the state of things then, and is yet. 
All the white men who were employed in these canneries were perhaps 
a foreman over from 60 to 80 Chinamen, and also the men who did the 
fishing in the river. This was from 1870 to 1874; but I am informed 
that it is just the same now. 

The Chairman. Are you now engaged in the tinning business? 

Mr. Gorman. I am. 

The Chairman. How do the Chinese come in collision with you ? 

Mr. Gorman. Because they do the work so much cheaper that we 
cannot compete with them. They have shops of their own ; they take 
the raw material into these shops, and they work day and night. They 
have no families, and they live crowded together. In those five or six 
city-blocks where they live there are probably 30,000 Chinamen, 
whereas it would take 75 blocks to hold the same number of white men. 
In this way the Chinamen live so much cheaper than white men that it 
is impossible to compete with Chinamen. 

The Chairman. What system have the Chinamen of vending their 
wares % 

Mr. Gorman. They sell them to wholesale dealers — white men. They 
are employed by these wholesale dealers. 

The Chairman. Will you be able to continue your business in com- 
petition with Chiuamen % 

Mr. Gorman. There are some portions of our business that the Chinese 
will not touch at all. They will not touch outdoor work or hard work. 

The Chairman. What kind of work do you mean ? 

Mr. Gorman. I mean any work around buildings. 

The Chairman. Do the Chinese understand plumbing ? 

Mr. Gorman. No, sir; not at all. That trade they have not been able 
to learn. The plumbers do not allow them to learn it, I guess. It is 
only tin ware and canning-works, and such small work as they can do 
inside, that they care for — coffeepots, tin pans, and things of that sort. 
Forty or fifty of them get down into a cellar and work at these things. 



DEPRESSION IN LABOR AND BUSINESS. 277 

The Chairman. Do they come here from China with a knowledge of 
the business, or do they acquire it here? 

Mr. Gorman. I think they acquire it here, although I never saw a 
shop where they learned it. A few of them generally learn a business, 
and when they get a full knowledge of it they go into business for them- 
selves and they ruu their former employers out of the trade. 

The Chairman. How many of the persons engaged in your branch of 
business have been obliged to abandon it on account of the interference 
of the Chinese ? 

Mr. Gorman. I do* not know that they have been exactly obliged to 
abandon it. They have been in a certain sense. 1 have known within 
the last two years fifty tiuners to leave this coast and go east. I know 
of one shop that had to discharge from twenty-five to thirty tinners. I 
do not know that that was in consequence of the direct competition of 
the Chinese, but I know that these Chinamen send goods to different 
parts of the State, where these other dealers had been sending their 
goods. The shops carried on by white men could not sell their goods 
so cheaply as the Chinese can, and they had to discharge their men. 

The Chairman. Give us an idea of what branch of workmen in your 
line of business are out of employment here by reason of this Chinese 
competition. 

Mr. Gorman. Those who work on household tinware, and in canning 
establishments. The largest number are those who used to work in 
canning establishments, because such establishments employed a great 
many men. 

The Chairman. Is that branch of work totally absorbed by the 
Chinese? 

Mr. Gorman. Very nearly. I have never been on the Sacramento 
River where there are canning establishments, but I have been on the 
Columbia Eiver, and there the work is almost entirely in the hands of 
Chinese. 

The Chairman. What, in your judgment, is going to be the effect of 
all this if Chinese immigration continues? 

Mr. Gorman. My judgment would be that if the Chinese immigration 
continues we will have to leave or fight ; I cannot see any other way. 
They will either drive us out or compel us to fight, because there is no 
such thing as competition with them. If the government does not give 
heed to us I do not know what we shall do. We shall have either to 
leave the country or to have a row, and I do not think that white men 
will be very apt to leave this country for Chinamen. 

The Chairman. That would depend on the forces opposed to you. 

Mr. Gorman. We can stay here even if we are dead. Our bodies will 
stay here. We mean to stay here at all events. One of the reasons for 
our hard times here is that tvhile 80,000 Chinamen are employed con- 
stantly we white men are out of work. These Chinamen send their earn- 
ings back to China instead of employing them here and building and 
owniug property here. I knew a Chinaman who had saved some 81,200, 
and he went right back with it. In that way they all take the money out 
of this country, while the white men stay here and build homes here. If 
we had 50,000 white men here at work instead of 100,000 Chiuamen the 
mouey would be kept here and the country would be more prosperous. 
If half of the number were white men there would be employment given 
to a great many thousand mechanics, and stores and shops would be 
supported. 

-The Chairman. Is it a common thing for persons in your line of busi- 
ness to come here from the East ? 



278 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Gorman. There are very few persons of my occupation now- 
coming here from the East. I have had letters from the East, and have 
advised my friends not to come here. 

The Chairman. How much can the Chinese undersell you? 

Mr. Gorman. A few years ago we were getting in Oregon for a cer- 
tain work on cans at the rate of $1 a thousand, and now the Chinamen 
have got it down to 36 and 40 cents a thousand. They do work for one- 
half less than we can do it for. 

Mr. Martin. What do pound cans cost? 

Mr. Gorman. Cans are sold by the dozen; some of them at $2 a 
dozen ; some more and some less, according to the size. I believe the 
pound cans are now selling for a dollar a dozen, and some of them I 
think as low as 80 cents a dozen. 

The Chairman. Do you know anything about Chinese immigration, 
as to whether it is diminishing or increasing ? 

Mr. Gorman. I believe that for several months it had been diminish- 
ing, but I believe that lately it is on the increase again. There was a 
time when there was a great deal of excitement raised against the Chi- 
nese here, and at that time Chinese immigration decreased. But I have 
noticed in certain late arrivals from China that there have been pretty 
full cargoes on the steamers. I suppose that the excitement had 
stopped immigration for a time. 

The Chairman. From your knowledge of the subject do you think 
that the Chinese and the white race can exist in harmony here together? 

Mr. Gorman. Never. 

The Chairman. You think that the white man will never assimilate 
to the Chinese nor the Chinese to the white man ? 

Mr. Gorman. They never can assimilate. When I came to this coast 
I had no feeling against the Chinamen. Whatever feeling I had on the 
subject was in their favor, because from my early reading on the subject I 
had supposed that China was the greatest country in the world. But I 
know now that the two races cannot agree, because one can live so much 
cheaper than the other that it is impossible to have them live together. 
One will drive out the other. 

Mr. Martin. You confine your statement to the Columbia River. I 
understood you to say that white men could get employment there if 
Chinamen were not there. 

Mr. Gorman. These canneries were all started originally with white 
men as workers, and they afterwards employed Chinamen. Certainly 
white men could get work there if there were no Chinamen there. 

Mr. Martin. The result of your testimony is this: This Chinese 
labor is an injury to the poor working man ; but it is beneficial to the poor 
consumer. The man who consumes the articles produced by Chinese 
labor is benefited because he finds these articles cheaper; but the 
laboring man whose wages are interfered with is injured because the 
Chinaman can work at less wages than he can. 

Mr. Gorman. To a certain extent that would be so, but still the ad- 
vantage to the consumer is so little that that can be scarcely taken into 
consideration. While a man may save half a dollar a month by buying 
Chinese made goods he may be thrown out of employment altogether 
on account of the Chinese. 

Mr. Martin. Suppose I want to buy a thousand of these cans, I can 
buy them for less money if they are manufactured by the Chinese than 
I can if they are manufactured by American workmen. 

Mr. Gorman. That is so. 



DEPRESSION IN LABOR AND BUSINESS. 279 

Mr. Martin. Therefore the dealer can sell to the consumer for less 
money J 

Mr. Gorman. Tes 

Mr. Martin. Therefore the consumer is benefited to that extent ? 

Mr. Gorman. Yes. 

Mr. Martin. Bat the American in the same line of business is injured 
because he cannot work as cheaply as the Chinaman can ? 

Mr. Gorman. That is nearly the result of it. except that I miy add 
that it will do no good to the poor man to be able to buy goods cheaper 
if he cannot get employment. 

Mr. Martin. You say that the Chinese immigration is on the increase? 

Mr. Gorman. I think that it is, at present. 

Mr. Martin. How long have you been living here \ 

Mr. Gorman. Eleven years. 

Mr. Martin. And you give it as your opinion that the races caunot 
live here together peaceably and quietly ? 

Mr. Gorman. I do. 

Mr. Martin. What is your idea of the remedy for- the trouble ? 

Mr. Gorman. To stop Chinese immigration. 

Mr. Martin. You think that Congress ought to pass a law to stop 
Chinese immigration entirely ? 

Mr. Gorman. I do. 

Mr. Martin. Would you have Congress to pass a law interfering 
with the Chiuamen who are at present here ? 

Mr. Gorman. Of course we can get along with those who are here 
now. Still they are already crowding out our business. If you stand 
in LiedersdorfY street, or in any of those streets crossing Montgomery 
street, and see the uumber of Chinamen who are crossing back and 
•forth from Clina'ovn you would probably be surprised. 

Mr. Marten. Do you know anything about the health of Chinatown ? 

Mr. Gorman. I do not. 

Mr. Martin. Is it healthy or unhealthy ? 

Mr. Gorman. At present it looks cleaner than I ever saw it in my 
life. I guess you cannot kill Chinamen very easily. They are pretty 
tough ; but I do think that if ever any epidemic disease comes here 
that place will produce it. If it were not for the cool northwest winds 
here in San Francisco we would be in a very bad condition from China- 
town ; that is, if dirt and tilth have any bad effect. 

Mr. Martin. The result of this Chinese question is this, that the 
man who consumes the articles produced bs Chinese labor is benefited ! 

Mr. Gorman. To a certain extent, yes. 

Mr. Martin. But the American who is engaged in the same business 
is injured, because he cannot get such wages as he can live properly on 
and support a family ? 

Mr. Gorman. Y>s. 

MiVMartin. Therefore Chinese labor comes in conflict with American 
labor ? 

Mr. Gorman. Yes. 

Mr. Martin. The Chinaman can work for a dollar a day, while the 
American requires $1.50 f 

Mr. Gorman. Exactly. 

The Chairman. But the result of the Chinese immigration will be 
that there will be no white producers left ? 

Mr. Gorman. Xot in this country. 

The Chairman. How about the city I 

Mr. Gorman. The city will become a Chinese town altogether. 



280 DEPRESSION IN LABOR AND BUSINESS. 

The Chairman. Then it will be the means of driving the consumers 
entirely out of the city, and there will be no consumers left ? 

Mr. Gorman. Certainly. 

Mr. Martin. If a man wishes to hire 100 hands upon a farm, or in a 
hotel, or at any other occupation, why is it that he employs Chinamen? 
. Mr. Gorman. Because he can get them so much cheaper, and can do 
as he pleases with them. 

Mr. Martin. Is not the cause of employing Chinamen really the fact 
that they can be employed for less money % 

Mr. Gorman. Always. 

Mr. Martin. A man who buys this tinware and these cans made by 
Chinese labor does so because he gets them for so much less money 1 

Mr. Gorman. Certainly. 

The Chairman. Can a white man live here at the compensation 
which a Chinaman receives and maintain a decent character and ap- 
pearance ? 

Mr. Gorman. No, sir; he cannot raise or educate a family on what 
Chinamen can live on and get rich. 

Views of Mr. Thomas Terry. 

Mr. Thomas Terry came before the committee. He said in reply 
to preliminary questions : I have been a resident of this city and State 
about seventeen years. My business is that of manufacturing ho>e, 
belting, collars, harness, &c, connected with the leather business. 

The Chairman. What effect has Chinese cheap labor on your business 
and occupation ! 

Mr. Terry. It has the effect of humbling the white men in our 
business. It has the effect of discoiiragiug my brother mechanics from 
coming here and living on this coast. It has the effect of driving many 
skilled men in my business into the Army and the Navy and the harvest 
field, and from this country altogether. That is the effect which it has 
in reality. There are some large houses in this city which employ 
Chinamen on harness work, particularly on collar work. I am a man 
of large family ; I have raised some children here, and have a family of 
eight to provide for. Through my industry in early days here I took 
up government lands under my right as an American citizen, but my 
harvests unfortunately failed through drought, and I was compelled to 
give up farming and to return to this city and seek employment. I was 
out of the city only four years, but when I came back I found myself, 
as it were, in a foreign country ; I found my business changed. From 
being a flourishing business for white men and white boys, it has passed 
into the hands of Chinamen with only white men as their foremen. I 
found the prices such that it would be impossible for me, even if I did 
get employment, to maintain myself alone, much less to maintain my 
family respectably. But in the first place I could not get employment 
at all, and if I did get employment in harness and collar making I 
could not get pay enough to maintain my family with common running 
expenses. The Chinamen are also in the business of harness making. 
White mechanics who are not so skilled are the most unfortunate, 
because the Chinese competition is the greatest we have. On what we 
call fine harness work we can occasionally get a job ; but in this city 
to-day the skilled men in our brauch of the business do not get as much 
wages as a common average mechanic gets in the city of Boston, Mass. 

The Chairman. Are you a journeyman ? 



DEPRESSION IN LABOR AND BUSINESS. 281 

Mr. Terry. I am a journeyman mechanic. I have been working tor 
others all my life since I have been able to work. 

The Chairman. What is the price of wages now compared with 
what it was before the Chinese usurped the channels of employment 
here ? 

Mr. Terry. When I first arrived in this country the average wages 
of mechanics was about 83 a day, in my particular line of business. 
A good many of them worked for 82.50, but others got from 83.25 to 
$4. To-day you can get first-class mechanics in our branch of business 
for $10 a week, and one establishment in this city (the largest) is em- 
ploying men for 810 a week — many of them the best skilled mechanics, 

Mr. Martin. Are they men of families f 

Mr. Terry. Yes ; some of them have families. 

Mr. Martin. Can they live on that wages ? 

Mr. Terry. If a man had a family as large as I have it would be 
pretty difficult for him to live on that wages. 

Mr. Martin. It would be very troublesome for you to live with your 
family on 810 a week \ 

Mr. Terry. I might exist, provided I was fortunate in the way of 
keeping good health ; but my family could scarcely exist on $10 a week, 

The Chairman. What is paid to a Chinaman for the same work for 
which white men get $10 a week ? 

Mr. Terry. The Chinamen are paid all the way from 85 to 88 a 
week. 

The Chairman. Then the difference between what Chinamen do the 
work for and what white men do the work for has the effect of driving 
white mechanics out of the business ? 

Mr. Terry. Yes; I can to-day find you men by the score in our branch 
of business who, if they had means enough to get back to their native 
cities in the East, would be only too willing to go back. I can point out 
to you mechanics standing on the railroad cars as extra men waiting for 
a day's work or half a day's work, and merely getting enough work in the 
week to keep theur. Some of them get one day's work in a week as an 
extra man on car driving. I know some of them who have been car- 
driving for two or three years, and it would be impossible for any man 
in our branch of business to hire these men again as harness makers, 
and to put them into the harness shops, because they consider them- 
selves better off and better paid now as car drivers than they would be 
as mechanics. 

The Chairman. Then they have been driven from their occupations, 
and have to seek other branches of employment ? 

Mr. Terry. Yes. 

The Chairman. Receiving less prices for longer hours of labor than 
they used to receive in prosperous days for shorter hours f 

Mr. Terry. That is it. I have been a close observer of this matter.. 
In the first place I pretend that I am a native of this country. I came 
herewith my family with the determination to make this my home and 
to stay here. I showed that determination when I accumulated means 
enough, by economy, to establish myself on government lands and to 
make for myself a home. When 1 found that means failed me I returned 
to the city, but found, after getting a situation, that I could, by econ- 
omy, save a little money, and the first step I took was to purchase a 
homestead under mortgage. I love my country and its institutions, and 
my notion of it is tbatthe presence of the Chinese here is dangerous to me 
and to all my fellow-workingmen who have to labor for a living. At 
one time here a few years ago, a gentleman carried on the business of 



282 DEPRESSION IN LABOR AND BUSINESS. 

manufacturing slippers. It was the only slipper factory in the city, 
and he accumulated in a short time a good deal of money. He em- 
ployed one Chinaman in a cellar on the corner of Sacramento and 
Battery streets. In a short time this Chinaman worked in his cousin 
^they all have cousins), and in the course of a year a Chinese company 
(whether it was this first Chinaman and his cousin or some others, I do 
not know) owned this slipper establishment. Mr. Marks, the original 
owner, then started into the business of boot and shoe making, but 
found that that was not as profitable as the slipper business, on account 
of the Eastern competition, and he attempted to get back again into the 
slipper business. He found, however, that it was utterly impossible to 
get back into it again, because John had a hold of that business. The 
fact of one of these Chinamen learning a business is qnite sufficient to 
take away that business from white men, because this Chinaman gets in 
another, and then gets in more, and he educates them; and in a year 
from that time it would be utterly impossible for any white mau to com- 
pete with the Chinamen in that line of business. 

Mr. Martin. Are these Chinamen whom you spoke of in the slipper 
business still % 

Mr. Terry. I cannot say whether these particular Chinameu are, but 
I know that the Chinese run the slipper business in this city, and have 
the sole control of it. They followed the slipper business up until a few 
of them got into the boot and shoe business. At the start they only made 
ladies' work, but they got on and on until now they manufacture men's 
work, and to-day the result is that with the improved machinery in the 
boot and shoe business, and with the aid of Chinese labor a mau can 
run a shoe factory successfully in this city independent of any white 
labor, even independent of a white foreman. To-day in this city facto- 
ries are running with improved machinery at which the Chinamen get 
skilled, and the emplo.\er is perfectly independent of and can conduct 
his business without any white man. Now, the Chinaman himself goes 
into the business ; and the Chinaman as a business man will gome day 
in the near future compete so directly with the manufacturer himself 
that it will be impossible for a white man to manufacture shoes in this 
city, even with the aid of Chinamen. The Chinese get into a hovel 
under the sidewalk, and crowd into a cellar, so that a place which would 
not accommodate more than three or four white men to work in will 
accommodate at least fifty Chinamen. Consequently the expenses are 
reduced. Then they go round and buy stock. They are the shrewdest 
buyers of any people I ever saw. They come into our establishment to 
buy cheap sole leather and scrap leather, and their shrewdness in buy- 
ing beats that even of my native Yankees. If you ask five cents a 
pound for a piece of leather, and if it is dirt cheap at that, the first an- 
swer they give is, u !s T o, four and a quarter " ; and they will stay there 
offering four and a quarter until they are almost driven out of the con- 
cern. Then when they purchase four or five or six hundred pounds, of 
leather, instead of having it sent home by express and paying 50 cents for 
expressage, they have their men put it in bags and carry it to their 
place of business. So it is also in the selling part of the business. In 
former days, when a man in the shoe business ran out of a particular 
size of boots and shoes — say out of number sevens or number eights — 
when he went to a wholesale establishment he had to buy a whole case 
of that size ; but to day the Chinaman goes over this city with shoes of 
all sizes on his arm, and the man in the retail business can pick out 
number eights, number nines, number fours, or whatever number he has 
a miiid to, and take any quantity of them he likes. The Chinaman is 



DEPRESSION IN LABOR AND BUSINESS. 283 

there every morning with more. Consequently the Chinamen will in- 
terfere as seriously with the business men on this coast as they interfere 
now with the laboring classes. 

As to our competing with them in cheapness of living, it is impossi- 
ble for a white man, whether he be German, French, or any other na- 
tionality, to do so. No white man can live in the same manner as these 
Chinese people live. I consider them a dangerous class of people. I 
consider them an immoral class of people. I love my family and my 
country; and all that I care for in the world is to protect my family. 
All that I have got to live for is their welfare. Now, I can take any of 
you gentlemen into this Chinese quarter, and show you sights which you 
would not have believed. I can take my little boy of eleven years, put 
a 25-cent piece in his hand, and let him go into one of these Chinese 
hovels, and there full-grown women will expose themselves naked as 
they were born into the world for the sum of 25 cents, and they will 
gratify all the desires or wishes that the boy may have ; and these are 
the people that we have to compete with, and that we are asked to affil- 
iate with. I have visited the city and county hospital (not for the pur- 
pose of seeing such sights, but to see a sick friend), and there I saw a 
sight which, as the father of a family and a lover of my country, made 
me shudder. I saw a child of thirteen perfectly eaten up with venereal 
disease, caught from these Chinese women. These are facts; and what 
we working people say about them is this : We cannot compete with 
these Chinese in mechanical pursuits; we cannot compete with them in 
living; we cannot affiliate with them politically or morally; it is im- 
possible. I have taken every step to the best of my judgment to pre- 
vent bloodshed and to prevent an outbreak on the part of the people. 
But myself and my only son are connected with an organization which 
is determined that the Chinaman shall not drive us from our homes and 
from our native country. I have got my son side by side with me in 
that organization, and I know many men whose sons are side by side 
with them in the same organization. I have done all that I possibly 
could in the way of bringing this thing before the people and before 
Congress. We are now determined that rather than allow these Chinese 
to come here and drive us from our native or our adopted homes, we 
will sacrifice ourselves and fight for it. The men in this organization 
that I speak of are lovers of the country, and what we may have to do 
in the line of expelling the Chinese will be done with no intention of 
offering an insult to the American flag. When we assemble in our place 
of meeting the American flag is hoisted. Every man in the organiza- 
tion must bow with respect to that flag. Our hostility to the Chinese, 
therefore, is not to be considered as an insult to the government, but we 
feel as though it is only a matter of a short time when we must take 
either one of these issues — when we must say that this Chinese immi- 
gration shall stop, or else we must get up and leave the country. We 
who are connected with that organization have come to the determina- 
tion that under no circumstances do we intend to leave the country. 

Mr. Cowgill. What is the titte of that organization-? 

Mr. Terry. It is known as the "Independent Twelfth Ward Kifles." 

Mr. Cowgill. Is it a military organization ? 

Mr. Terry. It is tending to become a military organization. 

Mr. Cowgill. What is the number of members in that organization ? 

Mr. Terry. We have got on our rolls somewhere in the neighborhood 
of 85 or 90 members, all American citizens. 

Mr. Cowgill. What is the extent of that organization in this city 
and State ? 



284 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Terry. If the issue were to come, I believe that at least from 
fifteen to seventeen thousand men would be enlisted in the matter. As 
to the number at present in the organization, I have not much of an 
idea. 

Mr. Cowgill. Have you some secret sign, grip, or pass- word by 
which the members of that organization recognize each other ? 

Mr. Terry. No, sir ; our meetings are public ; our purposes are well 
known. We joined together with the intention of being organized. 

Mr. Cowgill. Have you not here a city government composed of 
white men which is under your control? 

Mr. Terry. Yes. 

Mr. Cowgill. Why does not that city government, by ordinance and 
police regulations, do something for the purpose of checking these mon- 
strous vices that you have spoken of? 

Mr. Terry. In the first place we here on this coast have got into 
office, from time to time, heartless men, and, I believe, dishonest and 
selfish men. A short time ago (somewhere in the neighborhood of two 
years ago), the white men of this city, mechanics and skilled and com- 
mon laborers, assembled in thousands and appealed to the city govern- 
ment, to the mayor and board of supervisors, for an opportunity to 
scavenge the city and clean out the sewers and streets, for a compensa- 
tion of a dollar a day, and they were absolutely refused. 

Mr. Cowgill. Then I understand from you that it is as much the fault 
of the white men here who have the management of your city affairs, 
as it is the fault of the Chinamen, that these vices are not put down, or 
are not regulated by your municipal laws? 

Mr. Terry. I believe that that is the case. 

Mr. Cowgill. And the white men are as much at fault as the China- 
men ? 

Mr. Terry. Yes. 

Mr. Cowgill. Do you not know that white men, where they are not 
restricted by law, will discredit themselves, and will have nearly all 
abominable vicious habits equally with Chinamen 1 

Mr. Terry. I do not believe that white men can be brought to the 
same degree of viciousness as Chinamen. 

Mr. Cowgill. As I understand you, there are no attempted restraints 
on the part of the municipal government to put a stop to these evils ? 

Mr. Terry. Our city government has been a good deal to blame. 
Our mayor and some of our leading men of this city at one time called an 
anti-cooly meeting. It was the largest meeting that I ever witnessed on 
the Pacific coast for eighteen years. They got the people excited. And 
yet it was only a political measure, for when the people got excited 
these men drew out of it and said they did not mean it at all. The 
Chinamen were not disturbed, and these men went into office. I believe 
that the government at Washington has not paid heed enough to the 
curse of the Pacific coast. Our State and city officials tell us, when we 
present our grievances to them that they have no power over the sub- 
ject ; that the government at Washington is the only power to deal with 
the matter, and consequently they shirk responsibility, and nothing is 
done. 

Views of Mr. J. V. Webster. 

Mr. J. V. Webster came before the committee, and said in reply to 
preliminary questions: I am a farmer and horticulturist; I have been 
formerly master of the State Grange of this State. 



DEPRESSION IN LABOR AND BUSINESS. 285 

The Chairman. State iu a general way what, in your opinion, is the 
eflect of Chinese labor on the farming business of this State. 

Mr. Webster. I was engaged in business here for a couple of years, 
and I have learned considerable as to the effect of Chinese labor on busi- 
ness in San Francisco, as well as in the country. So far as the coun- 
try is concerned, Chinese labor has not that evil effect on it to the same 
extent as it has in San Francisco. It is true that some of the farming 
interests, especially that of horticulture, is feeling sensibly the effect of 
Chinese competition, for the reason that Chinese are entering into the 
business as principals themselves, to a very great extent. It is a noto- 
rious fact that, by some influence or other (and it is presumed by the 
influence of the six companies who are said to control the action of the 
Chinese on this coast), the Chinese have always a stipulated fixed rate 
for their wages when they go into the country. 

The Chairman. Give us an idea of what these six companies con- 
sist of. 

Mr. Webster. My understanding is that it has been through these 
companies that all the Chinese immigration has come to this State; that 
they are the heads of the several immigration companies. 

The Chairman. Are they all composed of Chinese? 

Mr. Webster. Yes ; that is my understanding. 

Mr. O'Connor. Are those companies chartered by the State \ 

Mr. Webster. I do not think so; but they are called the six com- 
panies. They appear to have, through their contracts or otherwise, 
control of the Chinamen after they reach this coast, and to have the fix- 
ing and controlling of their wages. In the country their wages is uni- 
formly a dollar a day, and if the farmers are not willing to pay that, the 
Chinamen will not work. That is so, at least with us in Alameda County, 
and I believe it is so in other counties. 

Mr. Dickey. Do these six companies co operate with each other or 
are they independent of each other? 

Mr. Webster. I believe they are independent of each other, and 
sometimes there is considerable antipathy between Chinese men em- 
ployed by the different companies. 

Mr. O'Connor. Have these six companies distinct names ? 

Mr. Webster. That is my understanding. 

Mr. Cowgtll. Are these six companies simply benevolent or char- 
itable organizations for the purpose of taking care of the immigrants who 
come here, and providing places for them, and finding employment for 
them, and if there are any sick among them procuring nurses and phy- 
sicians for them, or have they some other object in view, for instance, 
to make money out of the importation of these Chinaman ? What is 
the real object and purpose of the organization of the six companies? 
Are they simply charitable and benevolent in their object, or is their 
object one of profit ? 

Mr. Webstp:r. It is altogether one of profit. 

Mr. Cowglll. Do you know this, or is it merely a matter of presump- 
tion and conjecture ? 

Mr. Webster. I have never heard any other construction given to 
the organization of these companies than that their object is simply a 
matter of cool profit. 

Mr. Cowgill. Are they organizations that have their existence here, 
or do they exist iu China, having agents here? 

Mr. Webster. I understand that the heads are established here. 
There may be agents in China. 

Mr. O'Oonnor. Do these companies own ships. 



286 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Webster. No, sir; but these Chinamen are all brought here 
under contract. 

Mr. Dickey. Give us a full statement of how these six companies (to 
operate. 

Mr. Webster. I do nor know that I am competent to do that in de- 
tail. All the idea that I have of it is what I have derived from public 
information. I know nothing of it personally, only from what has been 
published and from conversation that I have had with those who pro- 
fess to know. But my understanding is that these companies have 
been organized for the purpose of bringing Chinamen to this coast on 
contract as a matter of speculation. I understand that the Chinamen, 
when they arrive here, are contracted to these companies to serve for a 
term of years at least, and that they are governed through the dictation 
of these companies as to where they shall go, and as to the wages for 
which they shall work. They have a secret service among themselves, 
and courts in which they appear to be able to compel Chinamen to fol- 
low their dictation independent of our laws. Whenever Chinamen can- 
not get the stipulated wages they go to work for their own people, even 
for their board. So that even in the horticultural region of San Jose y 
for instance, it is usually the case now that, instead of hiring Chinamen 
directly to do their work, Chinamen have leases of the land on which 
the berry crops are raised, and give a certain portion of the crop as 
rent. I have been engaged myself in horticulture, and have been run 
out of the business by Chinese competition. As an illustration of how 
the thing works in the country, I will give you an example: Three 
years ago I was at Alton Island, in the Sacramento River. I had some 
friends living there — a Mr. Pool and a Mr. Smith. These men had 
splendid ranches of from 600 acres to 1,000 acres. They leased a good 
deal of their land to Chinamen, and some of it to poor white men. They 
raise large vegetable crops of all kinds up there. Mr. Smith especially 
took me through his farm of 600 acres, and pointed out to me the various 
parts of it. "There" (he would say) "is a piece of land which I hire to 
Chinamen. See, it is perfectly clean and free from weeds, and they pay 
me rent of $23 an acre. They keep the weeds down, and the laud al- 
ways in good order. Now, here is a piece which I rent to white men. 
See, it is full of weeds." Up there at that time they were in favor of the 
Chinese. But a year afterwards our State Grange met here in San 
Francisco, and Mr. Pool and Mr. Smith were down here as delegates. 
They came to me and urged me to assist them in getting through the 
State Grauge strong anti-Chinese resolutions. I expressed my surprise, 
and inquired how it was that they had so changed within a year or 
eighteen months. Mr. Pool said: " Well, I will tell you. At the time 
you were up there we did not realize what we were doing, or what we 
were saving, but we have come to a realization of the difficulty in the 
matter/ While we admit that the Chinese are better cultivators of the 
soil than the white men whom we have rented to, and that the Chinese 
pay better rent, still the result is (and it is being developed to a greater 
extent every day) that the poor white men who have been renting from 
us, and others on the island, are being driven off the island themselves, 
and their families, because of the Chinese competition ; and it has got 
even now to that extent that a good many of the white families have 
left the country, and are leaving every day, because they cannot com- 
pete with Chinamen and pay the rent which Chinamen will pay for land. 
The result is that we have no census children to entitle us to a share of 
the school fund." (The State rate is so much per capita for the children 
between five and seventeen years of age, and there is so much of the 



DEPRESSION IN LABOR AND BUSINESS. 287 

school fund appropriated to a county in proportion to the number of its 
school children.) "The number of census children," they said, u is de- 
creasing, and consequently our revenue for school purposes is decreas- 
ing, and we are not able to maintain a district school for nine months 
in the year. Our poor white people are leaving, the houses are being 
deserted, and, unless this matter is stopped, we will have nothing but 
Chinese residents. In a word, the Chinese are depopulating the island 
of white people." 

Mr. O'Connor. You think that the influence of the Chinese in the 
agricultural districts of California has been detrimental to the welfare 
of the white people there"? 

Mr. Webster. I think it has been detrimental to the welfare'ot tne 
people generally, but at times it has been almost indispensable 'for farm- 
ers to employ them — that is, when they have large crops, and when 
there is a difficulty to obtain white men. Sometimes strikes are made 
by white men, and then the farmers have to employ Chinamen. 

The Chairman. Does the State tax Chinamen ? 

Mr. Webster. There is a per capita State tax of $2 a head. 

The Chairman. Do the Chinese never have property that is a subject 
of taxation ? 

Mr. Webster. Last year's assessment showed a million and a half of 
real estate property owned by Chinamen. The Chinese avoid the poll- 
tax whenever they can. They are all so much alike that a tax may be 
collected from one fellow one day, and if you meet him the next day you 
cannot tell whether it was he that paid the tax or not. You cannot 
tell one from the other. They are very shrewd. There is no shrewder 
people in the world. They know every officer in the city, and they 
especially know a tax collector in the city. The collector writes the 
name of the Chinese tax-payer in his list; but as their names are so 
much alike, aud asthey all resemble each other so much, he cannot tell 
the difference between them,sothat a dozen Chinamen can use the same 
tax receipt and the officer cannot tell the difference. He cannot tell 
w r hether the man who presents the receipt is the same one who has paid 
him the tax or not, because they all look so much alike. 

The Chairman. What is the effect on the industries of this country 
of the ownership of large estates? 

Mr. Webster. There is no doubt that the effect of it is detrimental. 
It is so in any country, and is especially so in this State even when large 
estates are held by those who farm the land. Where large tracts of 
land are held by oue person they are very difficult to cultivate. Our 
rains commence here in October or November. Usually in June we have 
clear hot weather, but the average difference in temperature between 
the winter and summer is only about four degrees in this city. There is 
a disposition to scratch over a great quantity of land and to get it ready 
in season tor a crop, so that the land is indifferently cultivated. Of 
course there are some sections of the country where it is necessary for 
a man to have quite a large farm, as in Fresno and Tulare Counties, 
where they raise only three or four bushels of grain to the acre. I un- 
derstand that this year they are cutting grain in Merced County and 
it is yielding only a bushel to the acre, and yet farmers are able to pay 
wages at that. 

The Chairman. How does a man manage to conduct a farm of 50,000 
or 00,000 acres ? 

Mr. Webster. I uever have been on such a farm ; but the presump- 
tion is that it is not well farmed. 



288 DEPRESSION IN LABOR AND BUSINESS. 

The Chairman. Does one man in this State undertake to cultivate 
50,000 or 60,000 acres ? 

Mr. Webster. I believe that Dr. Glenn cultivates about 40,000 acres. 
He has an estate of 55,000 or 60,000 acres. I believe he farms about 
40,000 of it. That is the largest farm in the State. 

The Chairman. We passed through a farm beyond Sacramento which 
we were told contained 47,000 acres. 

Mr. Webster. But that is not in cultivation. There are ranches of 
100,000 acres in this State ; but there is nothing raised on them. That 
is the worst feature of our land system. In the building of railroads 
throughout the State, the railroad companies were granted alternate 
sections of land for ten i#iles on either side of the line where there was 
government land. Consequently it is estimated that the railroad com- 
panies have within this State some 8,000,000 or 10,000,000 acres. I 
think that the Central Pacific Railroad Company got about 20,000,000 of 
acres from the government and from States ; but I do not think that it 
is all contained within this State. That land is all held in large tracts, 
and a great part of it pays no tax at all, for the reason that the railroad 
companies have failed or neglected to take out their patents for the 
land, and any laud that is not patented is not subject to taxation. In 
that way they evade the payment of taxes. The laud is held for specu- 
lative purposes. The companies can afford to hold it when they pay no 
taxes. 

Mr. Martin. Where is the title to the land ¥ 

Mr. Webster. The companies can get the patent whenever they 
apply for it. Then there are a great many Mexican grants. Those 
grants formerly covered the best portion of the whole State, but the 
land has been divided up very much. The grants have been all in liti- 
gation, and a great portion of the land has been lost before the claim- 
ants secured their titles. The lawyers generally got the biggest portion 
of it. One great difficulty about the land here is the danger of ex- 
hausting it. In the East, farmers can recuperate their land by seeding 
it down to clover or timothy, and by pasturing it. Here they cannot do 
that, because the land cannot produce a crop of timothy on account of 
the dryness of the season. The grasses die out during the summer, so 
that I think that with the present system of farming iu this State the 
land will be exhausted sooner than it ought to be, and we have not that 
means of reviving it here that the farmers in the East have. The only 
way we have is that of summer fallowing, and that is being resorted to 
very considerably in almost every couuty in this State. 

The Chairman. Does the man who holds a title under Mexican grants 
have to procure a patent from the United States % 

Mr. Webster. Yes. If his claim is allowed he has the right to a 
patent ; but there have been a great many fraudulent claims here, in 
which- the government has refused to recognize the title. 

Mr. O'Connor. Has there been any scarcity of white labor here ? 

Mr. Webster. In some seasons, especially in the season of harvesting 
and plowing, the farmers in the country have had at times difficulty in 
securing help. We begin to put in our crops iu October, and from that 
to March there is for the greater portion of the time considerable em- 
ployment. From that time on until June there is not anything to be 
done on the farms, especially iu the large agricultural districts. In the 
vegetable-raising districts, where they raise vegetables and small fruits, 
there is, of course, work -all the year round to some extent. Then we 
have our thrashing and haying, which last from the 1st of June until, 
usually, the 1st of October"; so that the labor in this State, I think, is 



DEPRESSION IX LABOR AND BUSINESS. 289 

more degraded than any other State. For this particular reason the 
farmers in this State, as a class, are poorer than the farmers in probably 
any other State in the Union. They are less comfortable. I have known 
farmers with good farms who live in a board shanty 12 or 15 feet square. 
Consequently when they hire a man to work for them they have no 
place for the man to sleep in, because they have barely room enough in 
the house for their own families. So the laboring man has to go to the 
hay-stack or somewhere else. That brings about bad habits in the 
laboring men, and they become dissolute and drunken. There is some 
allowance to be made for them for the reasons that I have stated, and for 
the further reason that the workingmen have no associations in the 
country. Consequently when Saturday night comes the laboring men 
have no where to go to except the corner grocery or the hay-stack, 
and they usually go to the corner grocery. Many of them thus get 
into habits of dissipation. Another feature of our. farmers' labor 
system is relative to hired help. An illustration occurred in Oak- 
field the other day. A family came out from Illinois with several 
nice young women in it who were quite well educated and 
respectable. In Illinois the hired help is treated as a mem- 
ber of the family. These girls came out here and went to 
service in the kitchen, presuming that they would receive the same con- 
sideration here as such persons received in Illinois ; but they soon found 
that their social standing was lost in consequence of their going out to 
service. It is conceived here that domestic service is for the Chinamen, 
and white girls lose their social position by going out to service. For 
that reason these young women quit the service they were in. Although 
they w^ere very poor, they thought more of their respectability than they 
did of their bread. There is no question but that Chinese service in 
this city and through the State has done more to degrade labor here 
than anything else. Labor is degraded here more than in any other 
State in the Union. I was raised in Tennessee, and, while I know that 
there were great distinctions in class there, I think that there is more 
distinction of class in this State between the poor laboring roan and the 
rich man than there was in the South during the worst rule of slavery. 
I came from Murray County, Tennessee. 1 left there in 1818 j then I 
lived two years in Illinois; and I came to this State in 1853. 

Mr. O'Connor. Then the effect of Chinese immigration has been to 
degrade labor here % 

Mr. Webster. There is no question about it. Not only that, but it 
is absurd to talk about competition with Chinese labor. Any one who 
considers the history of the Chinese people, who studies their customs 
and habits, will be satisfied that we have got to go through the same 
course of mental and physical training which they have gone through 
there before we can begin to compete with them — that we have got to 
educate, not only our minds, but our stomachs, to their condition of 
things in order to live on the subsistence on which they live. They 
have been four thousand years in educating themselves to their present 
modes and habits of life, and it is an impossibility for a white laborer, 
especially in this country, with any self-respect, to compete with them. 

Mr. O'Connor. What is the condition of the industries of the State 
of California now % Are they depressed, or are they prosperous % 

Mr. Webster. The industries are depressed. This Chinese question 
is one of the reasons. Of course every financier knows that there are 
other causes for the depression all over the United States in the matter 
of finances, and of the contraction of the currency, and (until within the 
last three or four years) of our imports exceeding our exports. Now, 
JJ» Mis. 5- 19 



290 DEPRESSION IN LABOR AND BUSINESS. 

however, the tables are turned, and we are getting back a portion of the 
money which we formerly shipped to Europe. Last year the balance of 
trade* in our favor was $250,000,000, and it will probably be $300,000,000 
this year. These balances are paid principally in bonds ; but neverthe- 
less their payment is to the financial improvement of this country. I 
think that the industries in this State ave more depressed than in any 
other State in the Union, because it is very dim" cult for our California 
people to get down to the idea of hard, steady work — that is, among the 
better classes. Every fellow comes here with the expectation of making 
his fortune in a few years, and if he has not been doing it in his busi- 
ness he has been disposed to turn his hand to speculation in stocks; 
and I think it safe to say that half the business men of this city have, 
at some time or other, engaged in stock speculations to their own detri- 
ment. While the masses have grown poor by such speculation, a few 
individuals have grown immensely rich. Consequently the wealth in 
this city is concentrated in fewer hands and to a greater extent than in 
any other State in the Union. 

Mr. Martin. While the masses of the people are very poor? 

Mr. Webster. The people in the average are less comfortable in this 
State, I think, than possibly any other State in the Union, 

Mr. O'Connor. Are there more people out of employment now than 
there were a year ago % 

Mr. Webster. It was very dull a year ago. I have seen no labor sta- 
tistics that I have examined. I should take it that at present there is a 
good deal of labor employed in the country, because the crops are better 
than they were last year. I think that the indications are that this fall 
will be the hardest time we have had. There is a disposition among 
those who ought to kuow better to make times harder than they ought 
to be. 

Mr. O'Connor. Is there any distress among the laboring people for 
want of employment? 

Mr. Webster. I think there is. There is a great spirit of pride among 
our people. I kuow a man iu Oakland whom I thought fairly well oif, 
or at least comfortable, whose family is absolutely destitute and would 
rather starve than beg. 

Mr. Cowgtll. Would they rather starve than labor? 

Mr. W^ebster. No, I think not. There is possibly here (as there is 
everywhere) an element that would rather beg than labor ; aud it may be 
that you would find that element to a greater extent in this State than in 
some other States. I do not kuow that that is a fact; but I know that 
many people say that they would hire a white man, only that it would be 
a matter of inconvenience to do so, because they have got to board him 
and to find him a place to sleep in, whereas when they hire a China- 
man they simply pay him his wages, and when his day's labor is 
over they are done with him. He takes care of himself. You can get 
any number of laborers here from $25 to $30 a month and find them. 
So long as Chinamen are allowed to come here, the condition of the 
laboring classes will be no better. People may say that they will not 
employ Chinamen ; that they love the white workiugman too well, and 
all that; that they are too patriotic to do that; but it is a matter of 
necessity to employ them. For instance, if I am raising small fruits, 
and say that I will not employ Chinamen, but will employ white men, 
I have to pay a white man $30 a month and board, (which is equiva- 
lent to $45 a month,) while my neighbors in the same business hire a 
Chinaman and pay him $30 a month, and, of course, I cannot com- 
pete with my neighbor who employs Chinamen. I was here in busi- 



DEPRESSION IN LABOR AND BUSINESS. 201 

ness in tbis city a year ago, and my business called me to the markets 
very early in the morning. I found that the Chinese had monopo- 
lized a great many trades here absolutely, especially the pork trade. 
I was surprised every morning to see Chinamen bringing in cartloads 
of dressed pork, and I inquired whether the Chinamen furnished all 
the pork, and the man to whom I addressed the question said, "Yes." I 
said, " Cannot white men compete with them?" He said, "No; the 
Chinese have got the trade." "How is that?" I asked. "Well," he 
said, " they ' pool their issues. 7 You never see a Chinaman go to a retail 
store to buy anything, or hardly ever. It" he wants ten pounds of 
potatoes, he and another Chinaman who also wants potatoes 
pool their issues, as Kearney says, and they go together and buy 
a sack of potatoes and divide them among themselves. Thus they 
get what they want for half what it costs a poor white laboring man. 
So that for that reason Chinamen will live on the same fare as white 
men for half of what it costs white men." He said, " They have 
always got the cash, and if a drove of hogs comes into town 
they will buy a thousand of them and divide them among themselves, 
paying cash for them, and thus getting them at the lowest possible rate. 
Their labor in dressing them is nothing, because there are always a good 
number of Chinamen who are out of employment, aud who work for each 
other for their bread. And so, also, the dressing of the hogs is done by 
the Chinese at very little expense, while white men generally pay $2 or 
$3 a day for a butcher, and so (this gentleman said) we find that these 
Chinamen bring their hogs into market dressed nicely with the heads 
cut off three inches nearer the shoulder than we usually get hogs from 
the white butcher, and they sell the meat for a cent a pound less than 
a white man does, because the Chinaman utilizes every particle of the 
offal. That is w T hat they live on." Another illustration. Up here on 
Sacramento street is a cigar store kept by Mr. Schaefer. I went in there 
the other day to buy some cigars. One member of the firm was damning 
the Chinaman. " Why," said I, " I am informed that you have got 100 
Chinamen up here in the loft working for you." "Yes," said he, "I 
know that; but damn the Chinaman." Said I, " I don't understand you." 
Said he,' " I will tell you the matter. I went around the street the other 
day and found that cigars were selling for $25 a thousand that cost us 
absolutely $28 — the same tobacco and everything. I went round and in- 
vestigated how that could be, and 1 found a number of Chinamen making 
cigars in a basement away down in the ground where there was hardly any 
light, aud where they were packed together like sardines. I inquired 
what was paid for the basement and was told that they paid $25 a mouth. 
I inquired w 7 hat they paid for their clerk, and I learned that they paid 
him $25 a month, whereas we pay $100 a month for the clerk and $150 
a month for the work-room." These fellows are the greatest imitators 
in the world, and tbis gentleman found that they would take an old 
cigar-box and patch it up and smooth it over, and fix up an old revenue 
stamp upon it, so that you would swear that it was a new box. They 
thus swindled the government out of its revenue; paid their workmen 
less than he did ; paid less rent, and of course produced cigars cheaper 
than he could. 

The Chairman. And it was that which induced him to damn the 
Chinese ? 

Mr. Webster. Yes. Of course cigar makers thought, at one time, 
that it was a very nice thing for them t« employ the Chinamen; but the 
Chinese weje too shrewd for them, for after they had learned the busi- 
ness they went to work to make cigars for themselves. All the uuem- 



292 DEPRESSION IN LABOR AND BUSINESS. 

ployed Chinese work for Chinamen for almost nothing, while they dare 
not work for white men at less than their stipulated wages, so that at 
no trade or calling has a white man any show, and it is a mere matter 
of time when the conservative business men of this State will have to 
leave it. 

The Chairman. How are you going to prevent this evil I 

Mr. Webster. I see no other way than by Congressional legislation. 

The Chairman. But suppose that that fails t 

Mr. Webster. If that fails, then it will be simply a strife for exist- 
ence on the part of the people of the coast, and they will take the mat- 
ter into their own hands in the end. 

The Chairman. Were you here in the days of the vigilance com- 
mittee? 

Mr. Webster. I was. 

The Cpiairman. Is there any reason to apprehend that this Chinese 
question may assume somewhat that same shape unless there be legisla- 
tion to prevent Chinese immigration ? 

Mr. Webster. In my estimation that would be a very mild shape for 
it to assume. The vigilance committee in those days appeared in a very 
intelligent and judicious shape. It was all that saved the city from the 
hands of the ruffians. You will find that every time it is necessary, 
and when the emergency arises, the people of this State take hold of it 
and settle it. They have enterprise enough to take hold of anything 
when the emergency arises. 

The Chairman. How is public opinion in this city in regard to this 
Chinese question % 

Mr. Webster. This fall, under an act passed a year ago last winter, 
we have to vote either for or against Chinese immigration, and I think 
that the result of that vote will settle the question in the minds of our 
eastern friends. There is to be a special vote on the question at the 
next election, which takes place on the 3d of September. It is to be 
simply an expression of opinion. A good deal has been said about its 
being the rougher elements that are opposed to Chinese immigration, 
and it was in order to test that question that this law was passed. 

Mr. Cowgell. As a means of ascertaining the public opinion ? 

Mr. Webster. Yes; and I think there will be 90 per cent, against 
Chinese immigration to this State. 

The Chairman. That does not contemplate any action, but- it is 
merely to ascertain public opinion 1 

Mr. Webster. Yes; with a view that this question may be definitely 
settled, and that the result of the vote may have some influence on the 
action of Congress. 

Mr. Martin. You would recommend Congress to pass a law to pre- 
vent further Chinese immigration % 

Mr. Webster. Yes. 

Mr. Martin. What would you do with the Chinese already here? 

Mr. Webster. That question will regulate itself. 

Mr. Martin. You would not interfere with them? 

Mr. Webster. I do not believe even in encouraging those who are 
already here, but I want to do what is fair and reasonable and not un- 
lawful in getting rid of those who are here. 

Mr. Martin. You would say that if Congress pass a law to prevent 
the further influx of Chinamen everything would be quiet and peaceable 
here and would regulate itself % 

Mr. Webster. I think that that is the best we can hope for ; but, of 
course, there is a disposition in this State to go to the extent of ihe 



DEPRESSION IN LABOR AND BUSINESS. 293 

police power of the State in addition to that. Bnt if that is done by 
Congress it will show to the people that Congress is disposed to act 
fairly and sincerely in the matter, and I do not think there will be auy 
riot or bloodshed in the State, because the police power will go to the 
extent that it can go to disconrage immigration, and to aid in shipping 
back, for instance, paupers and mendicants and all the criminal elements 
that come here from China, and in that way we will get rid of the evil 
as rapidly as possible. Even the Chinamen who are here are in favor 
of restraining any further Chinese immigration, so as to retain the 
benefits themselves. If Chinese immigration is stopped you will find 
withiu less than three years that John Chinaman will be wanting $1.50 
a day. 

The Chairman. But the six companies will not agree to let the traffic 
stop? 

Mr. Webster. O, no ; there is too much profit in it for that. 

Mr. Dickey. How long is it since this strong opposition to Chinese 
immigration has existed here ,? 

Mr. Webster. There was a feeling against it even when the Burlin- 
game treaty was adopted. It was felt then as though that treaty was a 
mistake; but the commercial men felt that here was a great opening for 
immense commerce, and that it would assist our city because every 
country through which eastern commerce has passed has grown wealthy. 
That was the idea associated with the Burlingame treaty. But even at 
that time those who looked deeper were dissatisfied with that treaty, 
and that dissatisfaction has been growing ever since. It has been in- 
tensified within the last three years. Many have attributed our finan- 
cial difficulty to the Chiuese element. Whether it enters into it or not, 
any financier must know that the contraction of the national finances 
within the last five or six years from $1,800,000,000 to about $800,000,000, 
must have had the effect of making all values shrink. The balance of 
trade being now in our favor the financial condition will be improved. 

Mr. Dickey. Since the Burlingame treaty has there been at any 
time a candidate presented by any party who favored Chinese immigra- 
tion? 

Mr. Webster. I think that that question in resppct of candidates 
and officers in this State has not been put forward until within the last 
four or five years. 

Mr. Dickey. Has there been any candidate presented by any party 
within the last four or five years favorable to Chinese immigration I 

Mr. Webster. I do not think there has been, because that would be 
death to him at once. While many employ Chinese there are but very 
few favorable to them. As a matter of necessity, a good many employ 
them who cannot avoid it without financial ruin. 

■ |Mr. CowGriLL. Is it a political question here at all '? All parties are 
opposed to further Chinese immigration here ? 

Mr. Webster. They profess to be. Our Congressmen have appar- 
ently done all that they could against Chinese immigration, but there is 
a feeliug, among the workingmen especially, that all has not been done 
that might have been done. 

Adjourned to Monday, August. 18,1879. 



294 DEPRESSION IN LABOR AND BUSINESS. 

San Francisco, Cal., August 18, 1879. 
Views of Mr. James F. Stuart. 

Mr. James F. Stuart came before the committee. 

The Chairman. We are informed that yon have considerable knowl- 
edge in reference to the land question in this State. Give us your views 
in reference to it, and as to the effect which the holding of large estates 
has on laboring industry and interests in this State. 

Mr. Stuart. The committee will probably notice in going about the 
streets in San Francisco that we have a very large population here doing 
nothing but seeking either employment or homes. Some of the reasons 
for that state of things I propose to lay before the committee. In the 
first place, we have in this State reservations of all the public lands— 
that is, all the odd sections of land — within a belt of from 30 to 60 
miles wide between San Francisco and the southern line of California, 
which is held in reservation for the Atlantic and Pacific Eailroad Com- 
pany. This railroad grant only extends from the other side to the Pa- 
cific Ocean. There the grant says the road shall connect with the 
Southern Pacific Road, and it is the Southern Pacific Company which 
has the grant from the southern line of California to San Francisco. 
Now the reservation of these lands, of course, shuts out from settlement 
the odd sections altogether, and the price of the even sections has been 
raised to $2.50 per acre. A great many settlers who have settled on 
public lands in the southern district have been bankrupted by being 
obliged topay $2.50 an acre for their land. Many of them were compelled 
to mortgage their lands, and many finally left them. Now what we com- 
plain of is, that there is no grant for the Atlantic and Pacific Eailroad 
through California ; that under the grant of Congress it only comes to 
the southern line of California, and there it is to connect with the 
Southern Pacific road, and it is the Southern Pacific Company that has 
got the grant of the right of way to San Francisco, and that company 
has built its road from the southern line of California to San Francisco. 
We understand that the grant of the Atlantic and Pacific Company is 
forfeited, and we are now asking Congress to restore these lands to 
settlement, so that the people who are without homes can get homes 
on those lands, both on the odd and even sections. The restoration of 
the lands to public market will bring all to one price. 

Mr. Martin. Is there any opposition to that request % 

Mr. Stuart. I do not know of any. Senator Sargent, I believe, pre- 
sented a bill for that purpose, and there have been several such bills 
presented. 

Mr. Cowgill. Do I understand you that the Southern Pacific line is 
finished entirely across the' State of California, from San Francisco to 
the southern line % 

Mr. Stuart. Yes ; the company is running its trains to the southern 
line now. I supposed that, there being no grant for that land, the Sec- 
retary of the Interior would exercise jurisdiction over the matter. In- 
asmuch as the President had heretofore determined, in connection with 
the Secretary and other officials, that no withdrawal of lands should 
take place until there was a grant to base it on, I supposed that the Sec- 
retary would feel justified himself in removing the reservation, there 
being no grant for it. Therefore I drew up a petition to the Secretary, 
but it seems that he considered that Congress had the sole power to re- 
store those lauds to market. I believe that the predecessor of Secretary 



DEPRESSION IN LABOR AND BUSINESS. 295 

Schurz had made a decision to that effect. I hand to the committee my 
petition to the Secretary in the matter. 

The Chairman. What we want from yon is not so much the details 
in regard to these matters as the bearing which this subject has on the 
industries of the country and on the occupations of the people. 

Mr. Stuart. You may see what an effect this reservation of so much 
land must have on the southern district of California. Now I have 
been ten years litigating a contest in the southern district between the 
owner of the Sespe ranch and the settlers located on the land outside. 
And although now settlers, most of them, can get their lands by simply 
paying office fees, they are so impoverished by drought and ten years' 
litigation that they can scarcely raise the means to pay the land-offise 
fees for entering the lands, even if they get the lands for nothing. 

The Chairman. What causes that impoverishment? 

Mr. Stuart. Droughts, failures of crops, and paying out money in 
endless litigation. We have had in this country a lot of men who are 
commonly called " land-grabbers" — men who are not satisfied to get 
what belongs to them, but who want a great deal more. In thi§ Sespe 
case the Mexican grant was for two leagues. The owner had it sur- 
veyed for six leagues, and he followed that thing for ten years before he 
gave it up, and when he did give it up he was dead. Somebody killed 
him ; but he never gave up while alive the idea that he was to have six 
leagues of land for two leagues. He took the decree confirming his 
grant for two leagues and carried it into the district court of the United 
States, and finally on the mandate of the Supreme Court of the United 
States he got his grant confirmed for two leagues. He went to the sur- 
veyor general's office, had the survey made, and then set to work to 
try to carry the grant for the other four leagues. 

There is another case which has been before Congress for seven years. 
I was in Washington in 1871-'72 trying to prevent the then Secretary of the 
Interior, Mr. Delano, from patenting 17,500 acres of the public land in 
a Spanish grant confirmation, and which land had 125 settlers with their 
families living upon it. I found the agent of that grant at Washington en- 
deavoring to get a bill through Congress to allow the claimant to go into 
court and litigate the boundaries of that ranch. It is the ranch Las- 
pulgas, between here and San Mateo. It was for four leagues in length 
by one league in depth — four square leagues. There was another grant 
afterwards made to another party binding on this grant, and the owners 
of this grant not only desired to get the land which belonged to them, 
but they also wanted to take in the land conveyed in the Copinger grant. 

The Chairman. These details are not what we are driving at. Our 
object is to ascertain how this land is occupied to the exclusion of the 
men who want to occupy it. 

Mr. Cowgill. If these cases have been adjudicated and decided in 
the highest courts of the nation I do not see what we have to do with 
them. 

Mr. Stuart. Suppose that there are now traveling around this city 
looking for employment 50 meu who were owners of the land that has 
been wrongfully taken from them. 

Mr. Cowgill. If these are matters that are proper for litigation, and 
if they have been actually litigated and passed upon, the committee has 
nothing to do with them. 

Mr. Stuart. The trouble is that they have not been. 

Mr. Cowgill. If the courts are the proper tribunal to determine the 
question Congress has nothing to do with it. 

Mr. Stuart. We do not propose to set aside any decree of the 



296 DEPRESSION IN LABOR AND BUSINESS. 

courts. The Supreme Court of the United States at its last session de- 
cided that we cannot do that. But when an executive officer with a 
decree of confirmation in his hand for four leagues goes out and surveys 
35,000 acres of land, instead of 17,500 acres, and when fifty men are 
turned out of their homes in consequence, Congress has a right to inter- 
fere. Some of these men have equitable cases. Some have bought 
under the Copinger grant, and some are settlers on the public lands, 
but they have no opportunity of contesting this fraud. I have advised 
with the best lawyers in San Francisco, and they say that where an ex- 
ecutive act exceeds the decree of confirmation — where, for instance, there 
is a grant and decree for 17,500 acres, and where the department at 
Washington has issued a patent for 35,000 acres — that is an executive 
act, over which Congress and the Attorney-General of the United States 
(especially Congress) have jurisdiction. In this case it saems that they 
litigated their equitable right, and found that without an act of Congress 
they cannot get into the courts. 

The Chairman. What remedy would you suggest after the courts 
have decided % How would vou get at it by legislation % Would you 
overrule the opinion of the court ? < 

Mr. Stuart. The court has not decided that question. The grant 
was for 17,500 acres, and the Supreme Court of the United States decided 
that that was all that there was in the grant. Then the owners went 
to the surveyor general's office and got a survey made for double the 
quantity of land. 

The Chairman. How? 

Mr. Stuart. That is the question. That is the very fraud we want 
to get at. 

Mr. Martin. Does the Supreme Court hold that the survey of the 
35,000 acres is good % 

Mr. Stuart. The Supreme Court simply decided that there was an 
equitable title in the claimant for the land of the grant, and we cannot 
go into court and defend against a legal title. 

Mr. Martin. Could the tenants be ejected without that point being 
settled % 

Mr. Stuart. Yes, sir. 

Mr. Martin. Could not the tenants go into court and show that the 
patent was only for 17,500 acres and that their land was not included 
in the 17,500 acres % 

Mr. Stuart. No, sir ; because you cannot defend an equitable title 
against a legal title. 

Mr. Martin. Are you counsel for those parties now % 

Mr. Stuart. I am not. 

Mr. O'Connor. What is the character of legislation that you would 
suggest % 

Mr. Stuart. To give these parties a standing in court, so that they 
can have this survey reformed. There is a bill for that purpose now 
before Congress. I mention this case because it is one of those very 
bad cases which I think Congress ought to give help in. Now I will 
bring a case of my own to show you how executive departments of the 
government have sometimes exceeded their powers and what misery 
they have thus brought upon large bodies of people. 

Mr. Cowgtll: Their claim is simply an equitable one and not a 
legal one, and you want Congress to give them a standing in court? 

Mr. Stuart. Yes; there was a grant presented to the land commis- 
sion for confirmation — the Milpitas grant, said to have been made to 
an Indian at the northwest of the mission of San Antonio, in Mon- 



DEPRESSION IN LABOR AND BUSINESS. 297 

terey County. That grant is a fraud from beginning to end. It pro- 
fesses to have been made by Alvarado, governor of California, in 1838, 
as constitutional governor, while he was not appointed constitutional 
governor for a year afterwards. It purports to have been made by him 
at a certain date at the mission of San Antonio, while he was not 
there at that time. That fraudulent grant was confirmed by the com- 
mission, and when it got into the district court new testimony was 
taken, and the grant was rejected as invalid. It remained a rejected 
grant for over four years (and they say that the district court loses juris- 
diction over its own decrees after term time). Then Juan N. Luco, well 
known in California, bought up this claim on speculation, and he had a 
judge of the southern district, Ogier, a drinking man, take jurisdiction 
of the case after this rejection four years before, and this judge re- 
viewed the case and confirmed the grant without a particle of other evi- 
dence, and without a bill of review. The decree was for about 12,000 
acres. Then certain parties got a deputy surveyor to survey 30,000 
acres of extra land outside of the grant and of the decree, on which 
land there were 100 settlers and their families. One of those settlers 
had been there long before California came into the Union, and others 
had been there almost from the time that California came into the 
Union. One of them had fifteen children born on his ranch. I got 
that case before Secretary Chandler. He took the side of the settlers, 
and told the attorney for the grant that unless he stopped all this thing 
against the settlers he would close the case at once. So long as the 
claimant of the grant lived all proceedings against the settlers were 
stopped ; but finally he died, and then the suit in ejectment was prose- 
cuted against the settlers, and a bill in equity was tiled to set aside the 
patent for fraud. The case is now before the Supreme Court of the 
United States. One hundred settlers and their families were turned out 
under this fraudulent patent, and they are wandering around this State 
now. In the Rio de Santa Clara case there were 125 settlers turned 
out of their homes. Congress should do something to stop these 
frauds. The executive departments of the government and their clerks 
in the Land Office issue patents for 10,000, 20,000, or 30,000 acres more 
than belongs to a grant, and yet Congress will not interfere. In the Mil- 
pitas case there were 100 families turned out of their homes in the dead 
of winter, and mauy of them were compelled to subsist on dead car- 
casses. 

Mr. O'Connor. How many persons have suffered by these land 
monopolies. 

Mr. Stuart. I have mentioned these cases of my own. In the Bio 
de Santa Clara case 125 settlers are scattered abroad ever since the 
fraud was carried out. 

Mr. O'Connor. What effect have these frauds had on the industries 
of California? Have they teuded to impede their development? 

Mr. Stuart. Of course the monopoly of large tracts of land must re- 
tard settlement. 

Mr. Martin. That is true also when a man honestly owns large 
tracts of land ? 

Mr. Stuart. Yes, sir. 

Mr. O'Connor. Our object is to ascertain facts, so that we may be able 
to present them to Congress in intelligent form — the influences exer- 
cised over the industries and population of this State by these laud 
monopolies. If land monopoly has been one of the causes that have 
retarded the progress of this commonwealth, we would like to know it 
in a general way without going into special cases. 



298 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Stuart. I do not. see bow I can get at it unless I go into 
special cases. 

Mr. O'Connor. How much of the public land of California is occu- 
pied under what is called false or fraudulent grants ? Are there large 
bodies of it occupied in that manner ? 

Mr. Stuart. No, sir. The large bodies of grants of land in Cali- 
fornia are genuine. There is no danger of disturbing land titles here 
by opening up these few cases such as I have mentioned. We under- 
stand that there have been 813 expedientes presented for confirma- 
tion, and that 579 of them are genuine and the rest fraudulent. 

Mr. O'Connor. Is the vast body of the lands of California lodged in 
the hands of few proprietors or are the lands distributed in small 
tracts % 

Mr Stuart. There are very large tracts of land held by great proprie- 
tors. 

Mr. O'Connor. What effect on the development of the State has the 
holding of these large tracts of land % 

Mr. Stuart. It has retarded the development^' the State, because 
people are not able to get homes on these lands. They are held at such 
high prices that people cannot buy them. 

Mr. Martin. How much per acre do the owners ask for them ? 

Mr. Stuart. Various prices. The railroad company has got immense 
tracts of land. I do not know what price the railroad company asks 
for its lands, but I think it is from $2.50 or $3 to $15 an acre. 

Mr. Martin. You would say that the fact of individuals owning such 
large bodies of land has a great tendency to retard the increase ot popu- 
lation? 

Mr. Stuart. Yes. 

Mr. Martin. What remedy do you propose that Congress should 
adopt for that state of things % 

Mr. Stuart. I do not see what Congress can do with men who hon- 
estly own property which they have bought and paid for. 

Mr. Martin. You cannot recommend any legislative remedy for that 
evil? 

Mr. Stuart. Not for such cases. But where men are holding large 
tracts of land which they have acquired by fraud, and from which they have 
turned out the original owners, then I think Congress should afford a 
remedy. 

Mr. Martin. But where parties own large bodies of laud which they 
have come by honestly you do not see that Congress can furnish a 
remedy % 

Mr. Stuart. I do not see how Congress can interfere with that 
thing. 

Mr. Martin. But at the same time you believe that the holding of 
these large bodies of laud is detrimental to the country % 

Mr. Stuart. Certainly, 

Mr. O'Connor. Have the industries of California been depressed, and 
are they in a state of depression now ? 

Mr. Stuart. Yes; very much, partly owing to the fact that there is 
so much difficulty in people who came here getting homes for themselves. 
Take this large belt of country that is withdrawn from settlement through 
the southern part of the State. It is 60 miles wide. If that was opened 
up men could go on it and get homes. There was a bill before Con- 
gress a short time ago to lend $500 each to settlers on the public lands. 
Instead of that just open up these lands to settlement and let the peo- 
ple come in on them. 



DEPRESSION IN LABOR AND BUSINESS. 21)0 

Mr. Martin. Would you not think it better to open up the lauds for 
settlement and also to give them $500 each? 

Mr. Stuart. I do not think it necessary to give them $500 each. I 
would advise Congress, instead of making any more grants of laud to 
railroads, to grant them help in money, and to reserve the lands for the 
settlers. I am not opposed to railroads where they are needed but let 
that help be in money, and let the land be for the settlers. 

Views of Mr. B. C. Duffy. 

Mr. B. C. Duffy came before the committee. He said, in reply to 
preliminary questions: I have lived in this city for eleven years. I am 
from Massachusetts. I am a cigar manufacturer. 

The Chairman. State what effect Chinese labor has had upon the 
cigar business in this city. 

Mr. Duffy. It has been the means of reducing our wages one-half, 
whereas the cost of living has been reduced probably only 25 per cent. 
At present, there are 350 white people engaged in the manufacture of 
cigars in this city. Their average wages will amount to $7.50 a week. 
There are 5,000 Chinese employed in the business in this city, and their 
wages will average $4.50 a week, so that the wages of the white peo- 
ple in that business amount to $2,625 a week, and the wages of the 
Chinese to $22,500, so that at least $15,000 is taken out of the State 
every week in that business, and is sent to China. Now, if white peo- 
ple were altogether engaged in that business, their weekly wages would 
amount to $40,125, all of which would remain in the country, and the 
greater portion of which would go immediately into circulation in this 
city. Tbe Chinese wages in this trade amount to $ 1,170,000 per annum, 
of which amount $780,000 is sent to China, leaving $390,000 to be cir- 
culated here, and that principally among their own people. This shows 
that if this cigar industry was conducted by white people alone the 
wages of these white people, even at the present low prices, would 
amount to $2,086,500 per annum, all of which would be added to the 
wealth of the State. This is a brief outline of w r hat we consider the 
effect of Chinese competition in our business. 

The Chairman. What effect has it had on the men whom you have 
had in your employment as cigar makers. Are they still here, or have 
they been driven out of the trade % 

Mr. Duffy. When the Chinese first went into the Cigar business 
there were probably in the neighborhood of 500 white men engaged in 
it here. That was in early days, when cigar-making first commenced 
here. That number was reduced three or four years ago to less thau 
100. Then a few men formed an association and gave the people to 
know those places where cigars that were made by white people could 
be bought, and there was a prejudice got up in the community against 
using Chiuese-made cigars on account of the disease that Chinamen are 
troubled with, and because it was shown by medical testimony that this 
disease is contracted by persons using the cigars made by these diseased 
Chinamen. This association advertised that cigars made by white peo- 
ple could be found at certain places, and consequently the demaud for 
cigars manufactured by white people has grown so as to raise the num- 
ber of hands employed in the business from 100 up to 350, and that 
number is gradually increasing. 

The Chairman. What number of white men engaged in cigar-making 
could supply the wants of this market if they had the control of the 
whole business? 



300 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Duffy. It would require almost as many white meu as there are 
Ohinameu aud white men engaged in it now. That would be between 
5,000 and 6,000 hands employed. 

The Chairman. What is the relative price as between white and 
Chinese cigar- makers ? 

Mr. Duffy. The white cigar-makers get probably 20 per cent, more 
for the same amount of work than the Chinese get. 

The Chairman. How is the price of the manufactured article ? Do 
the Chinese undersell you, or do you undersell them 1 

Mr. Duffy. They undersell us, of course. 

The Chairman. What percentage ? 

Mr. Duffy. Between 20 and 25 per cent. 

Mr. Martin. For the same quality of cigars % 

Mr. Duffy. Yes. One of the reasons why they can do so is this : 
They will buy 20 cases of leaf tobacco, for instance, from a leaf dealer, 
and they will take that tobacco to their factory, where they work all 
the time, night and day. The room which they hire for a factory they 
use all the time. They have two or three different gangs who take their 
regular watches. Consequently, the Chinese make up cigars a good 
deal cheaper than any white people can do. That is one of the reasons 
why they can do so, because they use their premises constantly. Another 
reason why they can do so is that their living is so very cheap. They 
turn these cigars in to dealers at a price which would hardly pay a 
white man for making them, to say nothing of the cost of the stock. 

The Chairman. Are the Chinese themselves tobacco smokers % 

Mr. Duffy. Yes, sir. 

Mr. Martin. Are the merchants who sell the leaf tobacco to the 
Chinamen white men or Chinese % 

Mr. Duffy. White men. 

Mr. Martin. And these merchants take the manufactured article and 
sell it out ? 

Mr. Duffy. Yes; they job it out. 

The Chairman. I thought the Chinese geuerally smoked opium in- 
stead of tobacco. 

Mr. Duffy. They smoke both, and they generally take care to smoke 
somebody else's tobacco when they do smoke. 

The Chairman. What do you mean % 

Mr. Duffy. For instance, if I employ 100 Chinamen I am supposed 
to furnish them with what they smoke. 

The Chairman. What remedy are you going to suggest ? 

Mr. Duffy. There is no way of remedying this unless Congress takes 
action in stopping Chinese immigration. So long as the Chinese come 
here I presume that people will employ them. 

The Chairman. Suppose Congress takes no action, then what % Will 
you submit quietly ? Have you thought that matter over ? 

Mr. Duffy. From the feelings of the people at present, I do not 
think that they will submit a great while longer. I do not think they 
can do so. I think they will be driven to taking the matter into their 
own hands. 

The Chairman. Do you speak of the people in mass, or do you speak 
only of the laboring part of the population? 

Mr. Duffy. I mean the majority of the people of all kiuds and occu- 
pations. This Chinese immigration affects all occupations. 

The Chairman. It does not affect the land question, does it % 

Mr. Duffy. It does. 

The Chairman. And the gold question ? 



DEPRESSION IN LABOR AND BUSINESS. 301 

Mr. Duffy. Yes. 

The Chairman. How ? 

Mr. Duffy. The Chinese are working our gold mines and sending 
the gold off to China. 

The Chairman. Are they owners of gold mines ? 

Mr. Duffy. Yes; they hire claims. They pay so much a mouth for 
the privilege of working them. 

The Chairman. They lease the mines, do they ? 

Mr. Duffy. Yes ; they lease what are called abandoned mines which 
white people have run over in early days and have left. The Chinese 
come along and work those abandoned mines to great advantage. They 
work so constantly and so carefully, and live so cheaply that they get 
a large quantity of gold out of these abandoned mines. If they did 
not clean them out so, white people might go to work and work them 
over again. 

Mr. Martin. You say that Congress ought to afford relief. You mean 
by preventing the further increase of Chinese immigration ? 

Mr. Duffy. Yes ; Congress ought to stop it right off. 

Mr. Martin. What would you do as to the Chinameu who are now 
here? What legislation would you recommend as to them? 

Mr. Duffy. The State of California and the city of San Francisco 
should enact sanitary and other laws to compel the Chinese to conform 
to our habits aud customs. 

Mr. Martin. But if the Chinese would not accommodate themselves 
to your city .regulations, what then ? 

Mr. Duffy. Then they would have to take the consequences. They 
would be punished according to law. 

Mr. Martin. You think it would require legislation, either by the 
city or State government, to regulate the Chinese who are already 
here? 

Mr. Duffy. It would require the laws to be put in force. We have 
laws here now that would remedy the evil to some extent if they were 
enforced — laws in regard to sanitary matters. 

Mr. Martin. Why are they not enforced ? 

Mr. Duffy. On account of the negligence of our officials. 

Mr. Martin. Are those officials white men ? 

Mr. Duffy. Yes, sir. 

Mr. Martin. And they do not enforce the laws ! 

Mr. Duffy. 2To, sir. 

Views of Mr. William Wright. 

Mr. William Wright appeared before the committee. He said in 
reply to preliminary questions: I have resided here since 1864; I am a 
native of the State of Massachusetts. My present occupation is the 
vending of vegetables and farm produce. My trade has been that of a 
plasterer. 

The Chairman. What effect has the Chinese immigration had upon 
your occupation as a plasterer? 

Mr. Wright. I learned my trade in this city between 1864 and 1866. 
At that time I could average at my trade $800 a year; but, through the 
Chinese immigration driving out white people, the amount of wages 
that I could earn by my trade for the last five years has been only $250 
a year. The rents are pr< tiy nearly the same as they were then, but 
the prices of provisions have been reduced. The reduction, however, 
is not at all corresponding to the reduction in wages. 



302 DEPRESSION IN LABOR AND BUSINESS. 

The Chairman. How did Chinese labor interfere with you in the 
plastering trade? 

Mr. Wright. It drove me out of the trade. 

The Chairman. Because the work was done by Chinese at a less price 
than you would do it for ? 

Mr. Wright. Yes ; and through people leaving the city. There was 
no demand for real estate. People would not put up buildings, because 
there was nobody to occupy them. The consequence was that I had to 
give up my trade. Then again, on account of the holding of large tracts 
of land in the country by a few individuals, there is no inducement for 
mechanics to leave the city and to go into the country to work. 

The Chairman. Did the Chinese come in competition with you in 
your trade as a plasterer? 

Mr. Wright. Not directly. 

The Chairman. But the result of it was that you had to abandon 
your trade and seek some other employment 1 ? 

Mr. Wright. Yes ; and in the business in which I am engaged at 
preseut, I do come right in competition with the Chinese. I buy and 
deal in vegetables, and I take them through the streets of the city to 
sell. I employ a horse and wagon in my business, while a Chinaman in 
the same business can take his baskets up to the third and fourth story 
of a house, where he meets with a good reception from the occupants of 
the house. On the contrary, I have to stand on the street with my 
wagon. I have to pay for my wagon and for my horse, and I have to 
keep up my family, while the Chinaman has no one to maintain but him- 
self, and if he realizes a profit of fifty cents a day on his day's work it 
is sufficient for him. My expenses of horse aud wagon will average 
seventy-five cents a day, and I have to pay the same license as the Chi- 
naman pays. 

Mr. Martin. The Chinaman travels with his baskets from house to 
house, while you go through the streets with your wagon I 

Mr. Wright. Yes. 

Mr. Martin. And the Chinaman can go up stairs with his baskets 
while you must remain in the street ¥ 

Mr. Wright. Yes ; I cannot very well take my wagon up stairs. 

The Chairman. Do you make a living at your business ! 

Mr. Wright. Not at present. That is, I do not live in the way that 
a white man should live. 

The Chairman. How many Chinamen are engaged in the peddling 
business in this city as venders of produce ? 

Mr. Wright. Between 400 aud 500 Chinamen are traveling through 
the city with baskets. 

The Chairman. How many white men are there peddling produce 
with their wagons % 

Mr. Wright. Between 100 and 150. 

Mr. Martin. Do the Chinamen sell the same kind of vegetables that 
you do % 

Mr. Wright. The same kind. 

Mr. Martin. Do they sell at the same prices % 

Mr. Wright. No y they undersell me. 

Mr. Martin. You say that you had to quit your trade as a plasterer 
on account of the fact that there were not people enough to occupy the 
houses that were built 1 

Mr. Wright. Yes. 

Mr. Martin. And not ou account of Chinese competition in that par- 
ticular. Then you abandoned that trade because you could get nothing 



DEPRESSION IN LABOR AND BUSINESS. 303 

to do, and you began to peddle vegetables 011 the streets, and there you 
come iu contact with Chinese labor ! 

Mr. Wright. Yes. 

Mr. Martin. And the Chinese undersell you because they can live 
cheaper than you can ; because they have no horse to keep and no wagon 
to keep, and have no wife or family to support % 

Mr. Wright. Yes. I occupy three rooms aud pay $10 a month for 
them ; I pay $10 a year for license ; 1 have to pay a blacksmith for re- 
pairs to my wagon and for* shoeing my horse, and 1 have to feed my 
horse. The Chinaman lives in Chinatown; he buys his produce along 
with other Chinamen, by the wholesale; then it is divided up into 
little parcels, so that they have it at the cheapest possible rate ; he lives 
in Chinatown and occupies about two square feet of room ; most of them 
are generally hanging up on a hook; they are packed as closely as sar- 
dines iu a box. That Chinaman's rent does not average him ten cents 
a month, and his direct living expenses do not amouut to $5 a month, 
whereas the cheapest rate that I can live at is $40 a month. 

Mr. Martin. Does he pay license as a peddler? 

Mr. Wright. He pays 87.50 a quarter, and I pay $10 a quarter. 

Mr. Martin. What is the reason of the difference in the cost of li- 
cense ! 

Mr. Wright. I suppose the Chiuamau is considered to be better than 
I am. 

Mr. Martin. Do the city authorities make you pay $10 a license while 
they let him off with 87.50 license? 

Mr. Wright. Yes ; that is the city ordinance. 

Mr. Martin. Does this city legislate in favor of the Chinaman as against 
the white man J ? 

Mr. Wright. The ordinauce reads in this way : That all venders of 
produce who use baskets shall pay $7.50, aud that all who use a horse 
and wagon shall pay $10. 

Mr. Martin. What remedy would you suggest J ? 

Mr. Wright. I would suggest the restriction of Chinese immigration 
aud the confining of Chinamen within certain limits, and thus in so 
many years I would force so many of them out of the country. 

Vieics of Mr. James (/Sullivan. 

Mr. James O'Sullivan came before the committee. He said, in re- 
ply to preliminary questions: lam a resident of this city; I have re- 
sided in California since 1847; I am a printer by occupation; I am not 
engaged on any newspaper at present. 

The Chairman. State how the presence of the Chinese has affected 
the printing business. 

Mr. O'Sullivan. There are aud have been for some years past, (at 
least ten years), idle printers walking these streets unable to lind em- 
ployment, and undoubtedly that state of things is caused by the pres- 
ence of the Chinese. Our boys and girls being excluded from other 
employments that are monopolized by the Chinese, are driven to find em- 
ployment where they can, so that all the printing offices in this city to- 
day, except the daily newspaper offices, are occupied by white boys and 
girls, who, as a matter of course, work cheaper than men. They learn 
composition very readily, and can be as useful as men in a very short 
time — six months or a year. Consequently, employers find it to their 
advantage to employ boys and girls to the exclusion of men. I trace 
that indirectly to the presence of the Chinese, who monopolize those 



304 DEPRESSION IX LABOR AND BUSINESS. 

other trades which would otherwise employ boys arid girls. That is how 
it affects my trade. 

The Chairman. The Chinese never set type, do they ? 

Mr. O'Sullivan. No. But the Bev. Otis Gibson and others are teach- 
ing them English, under the guise of religion, and it is only a question 
of time when they do begin to set type, as they do now in Houg-Kong 
and in all parts of China where the English are settled. 

The Chairman. Then their presence here has an indirect influence in 
affectiugthe printer's trade*? 

Mr. O'Sullivan. Yes. 

The Chairman. What are the wages of printers in San Francisco 1 

Mr. O'Sullivan. At present the average wages cannot be over $3 a 
day. Printers are paid by the piece. Some printers can make more 
than that ; but taking all the daily and weekly jjapers together the aver- 
age will not be more than $3 a day. The papers do not all pay the same 
rates. 

The Chairman. The large number of printers who are unemployed, 
have they as a general thing remained in the city? 

Mr. O'Sullivan. Some remain here and others, when they are able 
to emigrate, go elsewhere ; some to Nevada, some to Oregon, and some 
return east. For myself, I have been compelled repeatedly within the 
last twelve years to seek work in the country on country newspapers y 
sometimes as editor and sometimes as compositor. 

The Chairman. Are you in any employment now ? 

Mr. O'Sullivan. No, sir. I regard the presence of the Chinese as 
very injurious to the whole white people ; I regard it as injurious to the 
prosperity and progress of the State. In early days, when placer-min- 
ing was profitable, and when there were very few Chinese here — not more 
than 10,000 or 20,000 — (in 1852-'53), there was abundance of employment 
for ail the white men, and our population then was nearly as great as it 
is at present. In fact, California has been retrograding for years, and I 
trace that retrogression partly to the Chinese and partly to land-mo- 
nopoly. 

The Chairman. Is California retrograding in point of population ? 

Mr. O'Sullivan. It is not increasing much. People go from here to 
Arizona, Washington Territory, Oregon, Nevada, Montana, and Idaho; 
so that we have not increased as we ought to have done considering the 
advantages of our climate and soil. 

The Chairman. Is the encroachment which the Chinese are making 
a general one on all branches of trade and industry in this State ? &&*a 

Mr. O'Sullivan. Yes ; it is general all over the State. You will 
find Chinamen employed on farms, while white men are compelled to 
tramp over the State in search of work. 

The Chairman. Why are the Chinamen employed in preference to 
white men 1 ? 

Mr. O'Sullivan. Because they can be got cheaper, and because they 
are more docile — more like slaves. A good many people like to have 
slaves and serfs, and think that white men are too independent. 

The Chairman. Do the Chinese work for the same wages in the agri- 
cultural districts that white men work for % 

Mr. O'Sullivan. They work for less. 

The Chairman. What remedy have you in your own mind in regard 
to ridding the State of so great an evil % 

Mr. O'Sullivan. I believe that the only remedy is by stopping Chi- 
nese immigration by act of Congress, and by adopting measures to get 
rid of those" who are already here. If that is not done, I am sure there 



DEPRESSION IX LABOR AND BUSINESS. 305 

will be bloodshed in California in less than two years. The Chinese will 
be expelled by force. 

The Chairman. Have you any idea as to the u umber of Chinese on the 
Pacific slope f 

Mr. O'Sullivan. I have no idea only from what I have read. It is 
sometimes assumed that the Chinese number from 100,000 to 150,000. 

The Chairman. What have you to say on the question of land-mo- 
nopoly J ? 

Mr. O'Sullivan. Mr. Stuart was asked whether most of the land 
here was held legally, and said that the most of it was. Now, I contend 
that more than one half of the best arable land in the State has been 
stolen bodily — grabbed by land-grabbers, as we call them. Some of 
them have taken up land by what is know T n as the dummy system. That 
is, a system by which they go around town, pick up a man, take him to 
the land-office, get him to enter 160 acres in his name, and then get it 
transferred to themselves. That has been notably done by Mr. Hagan 
within the last two years in Kern County. He has taken up 2,000 acres 
under the desert-land act, and has taken land which is no desert. 

The Chairman. Who is in fault in granting patents under such cir- 
cumstances J ? Is it the land office? 

Mr. O'Sullivan. Yes. These men have used the land office for their 
purposes. Testimony has been given before a committee of the Califor- 
nia legislature that the land office has been used for this purpose. A 
man named Chapman came out here ten years ago from Minnesota with 
$30,000 iu Sioux scrip, and he located it all over this State. His clerk 
whose testimony was given before a committee of the legislature, testi- 
fied that Mr. Chapman had entered lands in the name of Indians who 
were dead, and had located this land scrip all over the State. 

The Chairman. That was not the fault of the register of the land 
office, was it J ? 

Mr. O'Sullivan. Yes ; Chapman had to have a permit from the land 
office. The board of equalization of this State, when revising the as- 
sessments of 1872, found that the number of farms in the State was 
27,996 at that time, large and small farms, and that the total acreage 
was 23,310,000 acres. These farms were divided into nine classes bv 
the board of equalization. The first class consisted of 23,315 farms, 

containing from 100 to 500 acres each, and averaging 250 acres total 

number of acres, 4,663,000. The ninth class consisted of 122 farms, con- 
taining 20,000 acres and upwards, the total acreage being 8,782.01)0. 
Here is a well- ascertained fact — that 122 farms in this State embraced 
double the quantity of land comprised in all the small farms. 

Mr. Martin. How would you remedy that; by legislation! What 
kind of a law would you have Congress pass to remedy that evil? 

Mr. O'Sullivan. I would make the law so strict that the pre-emption 
laws of the United States should be strictly carried out. 

Mr. Martin. As to these owners of large bodies of laud, what would 
you have Congress do; what kind of laws would you have Congress 
pass on the subject % 

Mr. O'Sullivan. My remedy would be that, after the death of the 
man who owned 1,500 or 2,000 acres of land, only a certain quantity of 
it should go to his heirs, and that the rest of the land should be thrown 
into the market and sold for the benefit of the heirs. 

Mr. Martin. How many acres would you let a man have? Suppose 
you have 50,000 acres of land, and 5 children. How many acres would 
you have the law allow to each child? 
H. Mis. 5 20 



306 DEPRESSION IN LABOR AND BUSINESS. 

Mr. O'Sullivan. One hundred and sixty acres would be amply suffi- 
cient; but I would give more. 

Mr. Martin. How much more? 

Mr. O'Sullivan. I would give 500 or 600 acres. 

Mr. Martin. What would yon do with the rest of the land? 

Mr. O'Sullivan. I would sell it and divide the proceeds among the 
heirs. 

Mr. Martin. So you would keep the value of the property, after all, 
in the family? 

Mr. O'Sullivan. I would keep the money in the family, but not the 
land. 

Mr. Martin. Would you not let the children buy the land them- 
selves? 

Mr. O'Sullivan. No. The State of Ohio has under cultivation less 
than 27,000,000 acres of land, and in that State there are 195,000 farms, 
only a few of which contain more than a thousand acres. Mr. Stuart 
spoke of the Rio De Santa Clara grant. Mr. Tom. Scott bought four 
leagues of land on that river, the finest land in the county. He got 
the deputy surveyor to go down and survey it for him, and he extended 
it to eleven leagues. 

Mr. O'Connor. Is there anything else that you wish to say? 

Mr. O'Sullivan. The land held by more than half of the large land- 
owners in California has been stolen from the public domain. There 
were no Mexican grants in the San Joaquin valley, or on the Sacra- 
mento or Sierra Nevada. All the original Mexican grants were confined 
to the coast counties, and did not cover the area of those counties. The 
land in San Joaquin and Sacramento has been grabbed under manufac- 
tured Spanish titles. These large holdings have retarded the prosperity 
and growth of California, and have kept down our population. In my 
travels through the State I have met farmers who told me that they 
traveled from the Oregon line to San Diego in search of a desirable piece 
of government land to settle on, and that they could not find it, and 
that they could not purchase land from these landholders at less than 
840 to $50 an acre. The best land in the State is all taken up in this 
manner. There is nothing left but stony hillside and sand-hills in a 
State capable of supporting a population as great as that of France. 
The aim of these men, I believe, is to create a species of slavery here, 
with the Chinese working on their ranches. 

Mr. O'Connor. Then, the two causes of the depression of industry in 
California you ascribe to the presence of the Chinese and to land-mo- 
nopoly ? 

Mr." O'Sullivan. Yes, sir. 

Views of Mr. Samuel Braunhart. 

Mr. Samuel Braunhart came before the committee. He said, in 
reply to preliminary questions: I have been here since 1862; I am a 
commercial traveler in the boot and shoe trade ; I travel throughout 
the State ; I have been engaged in that business about two years. 

The Chairman. What is the effect of Chinese competition on the 
boot and shoe business ? 

Mr. Braunhart. Formerly there were no manufacturers of boots 
and shoes belonging to the Chinese race iu this State. Now there are 
large numbers of them. They do not as yet manufacture boots exten- 
sively, but they manufacture all kinds of children's, misses', and ladies 7 
wear, as well as slippers; also the brogans and coarse shoes worn by 



DEPRESSION IN LABOR AND BUSINESS. 307 

laborers. In my opinion nine-tenths of the ladies', misses', and children's 
shoes that are worn in California to -day are manufactured by Chinese. 
That has been my experience as a traveler, because the class of goods 
manufactured by the Chinese cannot be manufactured by white labor 
at within 30 or 40 or sometimes 50 per cent, of the price. Hence, all 
those kinds of goods are purchased by country merchants directly from 
Chinamen. Country merchants who come into this market to buy their 
goods buy their boots, brogans, and boys' aud children's supplies, and 
goods of that nature, directly from Cainameu. The same kinds of 
goods if purchased from the white manufacturer would cost 33 J per 
cent. more. It is true that the Chinese goods are inferior to the goods 
made by white men, but nevertheless people will buy them ou account 
of their cheapness. 

The Chairman. How much cheaper do the Chinese sell their goods 
than the white men do? 

Mr. Braunhart. It is not the same class of goods, but it is a class 
of goods that will sell equally as well, especially in auction stores and 
cheap country stores. Tne Chinese sell from 40 to 50 per cent, less than 
similar goods made by white men. 

Mr. Cowgill. I understand you that what you are complaining of is 
that men will buy an inferior article rather than a superior one because 
they can get it at a less price. 

Mr. Braunhart. Not exactly that. I mean to say that a class of 
goods is manufactured by the Chinese which has taken the place of the 
same class of goods manufactured by white labor. They are inferior of 
course. No article manufactured by the Chinamen is equal to the like 
article manufactured by white men. But people will buy cheap goods, 
and the Chinaman producing the cheapest goods will survive. It is my 
opinion that in less than five years, it Chinese immigration continues, 
there will not be a shoe-manufactory carried on by whites iu the State 
of California. 

The Chairman. Have you been over all parts of the State '] 

Mr. Braunhart. Yes. 

The Chairman. Did you find this competition everywhere ? 

Mr. Braunhart. Everywhere. There are some merchants who do not 
purchase Chinese-made goods, but these are in places where people will 
pay high prices. But in towns like Sacramento and Stockton they pur- 
chase almost exclusively Chinese goods. Take a lady's bal moral, which 
costs $16.50 a dozen to manufacture. We can sell them for $18 a dozen. 
The Chinaman will manufacture an article that will look as well (of 
course it is inferior in quality), which he will sell for $13.50 a dozen. 
There is an auction establishment in this city, carried on by Davis & 
Co., which takes goods from at least 500 Chinamen, and I have seen 
goods sold there at prices at which, in my opinion, it would pay to ship 
them Bast, and to sell them there by auction. 1 have seen children's 
buff calf shoes sold as low as 45 cents a pair, which, in my opinion, 
could not be manufactured by white labor at $10 a dozen. 

The Chairman. Can the Chinese manufacture good qualities as 
cheaply as the white mau can, and, if so, how would it be about the 
prices ? 

Mr. Braunhart. They still could manufacture them at least 30 per 
cent, less than white men, on account of the cheapness of Chinese labor. 

The Chairman. What effect has this had on the manufacture of boots 
and shoes in this city. 

Mr. Braunhart. It has had the effect of bringing starvation to the 
doors of white boot aud shoe makers. It has thrown them out of em- 



308 DEPRESSION IN LABOR AND BUSINESS. 

ployinent. When the manufacturing of boots and shoes was undertaken 
here first, there were twenty white shoemakers employed where there 
is one employed now. 

The Chairman. Do the Chinese monopolize the shoe-business? 

Mr. Braunh^rt. ]N~ot altogether, but the greater part of it. 

The Chairman. What do we understand you to mean by that? 

Mr. Bratjnhart. Two-thirds, and I might say three-fourths, of the 
goods worn by ladies and children and misses in California are made 
by Chinese. 

The Chairman. What number of people are out of employment to-day 
in this State in that line of business 1 ? 

Mr. Bravnhart. 1 cannot tell. 

The Chairman. W T hat other trades and occupations are there within 
your knowledge, in 3 our daily walk in business, which have been injured 
by coming in conflict with Chinese labor? 

Mr. Braunhart. The manufacture of furnishing goods, shirts, over- 
alls, jumpers, and goods of that kind is carried on to day by Chinamen. 

The Chairman. What do you call overalls ? 

Mr. Braunhart. I mean what covers the pants. Denham and duck 
goods aie all made by Chinamen. I should say that there are 6,000 
Chinese employed in their manufacture. They are used by laborers in 
the southern counties, where the climate is very warm. They wear 
them tor pants exclusively. 

The Chairman. What are they sold at a pair? 

Mr. Bratjnhart. They are sold as low as 84,25, and as high as 
$10.50 a dozen, wholesale. They sell at retail as low as 40 cents a pair, 
and as high as $2.50. 

The Chairman. Who manufactured them before the Chinese took 
hold of tiie nnsiness ? 

Mr. Braunhart. I admit that there was no manufacture of that 
class ot goods here formerly ; th.y ueie bought East. But a number 
of white girls have attempted to secure work at that busiuess. They 
were willing to woik at 50 cents a day, but they could not procure em- 
ployment. I am speaking now of shirts, canton flannel underwear, 
overshirts, &c. 5 all of California manufacture. There are hundreds 
and thousands of girls who could be very profitably engaged in 
that class of work if they could compete with Chinese labor, but it 
appears that people here would prefer to employ Chinamen rather 
than white girls. 1 believe that white girls would be willing to work at 
50 cents a day. The reason why they do not employ these girls is that 
they say they cannot get goods quick enough from them. For instance, 
if a country merchant sends an order here for 50,000 overalls of a par- 
ticular size, and if the dealer has not got them on hand, he must give 
his order to some Chinaman who is employing persons in the manufac- 
ture of that kind of article; and the Chinaman will bring them to him 
within 24 hours — 500,000 of them if necessary — whereas if the order 
were given to girls, it would take them weeks and months before the 
order would be tilled. I believe there are over 6,000 Chinamen em- 
ployed in the manufacture of gentlemen's furnishing goods here. 

Mr. Cowgill. Wiiat do you regard as a fair compensation for the 
labor of females per day ? 

Mr. Braunhart. Servant girls frequently receive in this State $30 
a month and their board. 

The Chairman. Do you know that all through the West, in Ohio, In- 
diana, Illinois, and all those States, where the population is far greater 
than here, $1.50 a week is fully an average price for female labor? 



DEPRESSION IN LABOR AND BUSINESS. 309 

Mr. Braunhart. I have heard of such beiug the fact, but $1.50 a 
week and board amounts to more than 50 cents a day. No girl can 
board herself here at 50 cents a day. 

Mr. Cowgill. Produce is as cheap here as with us. 

Mr. Braunhart. That may be true, but a girl cannot live decently 
at 50 cents a day, and buy her clothing. 

Mr. Cowgill. Where did you come from ? 

Mr. Braunhart. From Germany. 

Mr. Cowgill. How long is it since you came to this country ? 

Mr. Braunhart. I came here in 1862. 

Mr. Cowgill. What business have you followed before your present 
business f 

Mr Braunhart. I have been a salesman as a general thing. 

xMr. Cowgill. Did you ever do anything in the way of producing 
anything'? Your business has been to barter and sell, has it not been % 
Were you ever a producer of anything that fed or clothed anybody % 

Mr. Braunhart. Yes, sir; I consider myself a producer. 

Mr. Cowgill. What do you produce ? 

Mr. Braunhart. I produce laborers. 

Mr. Cowgill. What do you mean by that? 

Mr. Braunhart. I mean that by my being engaged in employment 
others are employed. I am one of the distributors of the commodities 
of life. 

The Chairman. You are a commercial agent, traveling from town to 
town, selling for others? 

Mr. BraunhArt. Yes ; I am a working in an. 

Mr. Marttn. What remedy would you propose for all this evil % 

Mr. Braunhart. First, I would abrogate the Burlingame treaty al- 
together. 

Mr. Martin. Then what % 

Mr. Braunhart. If that treaty could not be abrogated, I would ex- 
tend the same privileges to the Chinese in this country that Americans 
have in China. If the people East are willing to have Chinese immi- 
gration, let them throw open the ports of Boston, Xew York, and Phil- 
adelphia, and we will exclude them from San Francisco, Portland, and 
the other Pacific ports. 

Mr. Martin. Then what! 

Mr. Braunhart. Then, perhaps, when the Chinese reach the shores 
of the Atlantic, the people of the East would cry out, as we cry out 
hereto-day, "The Chinese must go." In the absence of that I would 
exclude Chinese immigration altogether. 

Mr. Martin. Suppose that the Burlingame treaty be not annulled, 
and that Chinese immigration be not excluded, what then ? 

Mr. Braunhart. I am not prepared to say what the remedy then 
would be. I have peculiar views on the subject. I believe there is a 
power inhereut in the State, guaranteed by the Constitution of the United 
States, to protect itself against all evils. I think that under the tenth 
amendmeut of the Constitution of the United States the State of Cali- 
fornia can deal with this question itself. But we prefer not to deal with 
it in that manner. I think that our State legislature can legislate on 
the subject, but we prefer to have Congressional action. This State 
has always been loyal to the Union, and we propose to remain loyal. 
Still I am not prepared to say what the people will do if this condition 
of things is to continue. I think that one step which Congress might 
take in the premises is to compel all American manufacturers to stamp 



310 DEPRESSION IN LABOR AND BUSINESS. 

their goods so as to show by what class of labor the goods are manufact- 
ured, whether by Mongolian labor or white labor. 

Mr. Martin. What would be the object of that? 

Mr. Bratjnhart. To warn people on this coast. A good many white 
men will not purchase goods that are manufactured by Chinese labor. 

Mr. Martin. Do you not think that that law would be violated ? 

Mr. Bratjnhart. I would make the penalty for its violation so severe 
that it would not be violated without the risk of these gentlemen wear- 
ing the striped clothes of the penitentiary. As to the land question, 
people are making false entries under the desert-land law, and are gob- 
bling a great deal of land in the San Joaquin Valley, the Tulare Valley, 
and other paits of the State. The law has been loosely drawn, and 
people are making these entries under fictitious names. They can go 
to the land-office, pay 25 cents an acre, and three years afterwards a 
dollar more, and get a patent for the land. Under that law, which is 
very loosely drawn, hundreds of thousands of acres have been gobbled 
up in the various parts of the State. Another cause of land-monopoly 
in this State is the confirmation by Congress of a great many fraudu- 
lent Spanish grants. People who had grants for two leagues nave gen- 
erally got them confirmed for eleven leagues. 

Mr. Martin. How ? 

Mr. Bratjnhart. The grant generally stated so many leagues, more 
or less, and the boundaries were generally very indefinite. They would 
say the north corner of a certain log or a certain rock, but the metes 
and bounds were improperly defined, and in this way the claimants se- 
cured lands that were not intended to be covered by the grant. 

Mr. Martin. What would be the remedy as to the holding of these 
large tracts of land ? 

Mr. Bratjnhart. The only remedy would be to make the owners pay 
taxes on the lands. That is a matter altogether for State legislation. 

Mr. Martin. These waste lauds that are not used as farms are not 
taxed, are they ? 

Mr. Bratjnhart. They are taxed, but not sufficiently. A man may 
have 40 acres of laud and be assessed $£ an acre, while another man may 
have 4,000 acres of land and be assessed only $2 an acre. I think that 
equal taxation will fix it. As soon as the holders of large traets have 
to pay their just apportionment of the tax, I think the system will be 
broken up. I think that the remedy is already in our hands, as the new 
constitution provides that all lands of equal agricultural capacity must 
be taxed alike. They are held now merely for speculative purposes. 
We will deal with that question in the next legislature. I am going to 
be elected, and I will attend to it. 

Views of Mr. Stephen Maybill. 

Mr. Stephen Maybill came before the committee. He said, in reply 
to preliminary questions : 1 have been a resident here since 1861; my 
business is lathing houses. 

The Chairman. State how your business has been affected by the 
presence of the Chinese. 

Mr. Maybill. My trade, like a great many others, is interfered in 
indirectly quite as badly in the end as though it were interfered with 
directly. Young men, for instance, who go to the vineyards looking for 
jobs find Chinamen employed there, and not being able to get employ- 
ment there, they come to San Francisco and get jobs on buildings. In 
every other branch ol industry it is the same, and men have to resort to 



DEPRESSION IN LABOR AND BUSINESS. 311 

those trades that are not meddled with by the Chinese. The result is 
that where probably there would not have been oue, there are half a 
dozen men who have to resort to lathing in order to obtain a living. 
That overstocks the market, and the result is that wages have gone 
down to. ruinous rates. 

The Chairman. What are the wages in your trade now ? 

Mr. Maybill. About $L.2a a day, but that will not average 82.50 a 
week, as men do not find employment more than probably two days a 
week. They get work for one week, and then they have to leave off for 
two or three weeks. 

Mr. Oowg-ill. Is there not anything else that you can be engaged in ? 

Mr. Maybill. If there is one person in the trade whose business is 
diversified it is myself, tor I have pitched into almost everything. I 
have carried the hod ; I have even sluug a pen in a country newspaper 
office ; but I have been always finally driven back to my old business. 
Up to within two years the direct influence of Chinese immigration was 
never felt in its full force. About two years ago hard times began. I 
have seen from 100 to 200 laborers here sleeping in the streets at night, 
wandering about the streets in the day, and living off the soup-houses, 
objects of charity. Before that the laborers as a class were a reputa- 
ble body of men. This vagabond business has had an evil effect upon 
them, especially morally. During the last two years at least from five 
to seven of my acquaintances have been sent to the State penitentiary 
at San Quentin fur crimes. These men 1 was personally acquainted 
with, and they were no more criminally inclined than the general run of 
men, but to-day they are inmates of San Quentin. Others of my fellow 
workmen have become drunkards. Sleeping in the streets at night and 
wauderiug in the streets by day has had a debasing influence upon them, 
and to-day two-thirds of them are habitual drunkards. 

Mr. Cowgill. How do they get money to procure whisky if they 
cannot procure bread ? 

Mr. Maybill. There are men who can live on beer and who cannot 
exist without beer. When they get only two bits or four bits a day, 
that will not pay the rent of a room and feed and clothe them, and so 
they become desperate, aimless, and hopeless, and in that state of mind 
if any one proposes a can of beer they accept it, aud then comes another 
can, and so on until intoxication becomes a habit with them. 

The Chairman. Is the general labor here in a depressed condition ? 

Mr. Maybill. Yes; I have seen this same thing in other trades. I have 
seen more intoxication since wages went down than I saw when wages 
were high. I was a little more economical than the rest, and I saved a 
little and purchased a house and lot, but the effect which the depression 
has had upon my class is this : In the last two years I have gone in 
debt 8350, and if the thing continues I will be gradually absorbed into 
the army of tramps, bummers, and vagabonds. It is only a question of 
time. That is the demoralizing effect upou workiugmen of all trades. 

Mr. O'Connor. Are the Chinese engaged in this business of lathiug ? 

Mr. Maybill. Xo ; but they enter upon a majority of other occupa- 
tions, and the result is that young men who cannot get business in those 
other occupations have to resort to those where no Chiuese are em- 
ployed. There isn't work sufficient for all, and when a white man is 
driven from one trade he has to resort to another. 

Views of Mr. 8. A. Eusel 
Mr. S. A. Kusel came before the committee. He said, in reply to pre- 



312 DEPRESSION IX LABOR AND BUSINESS. 

liminary questions : lam a resident of San Francisco. I have lived 
here two or three years. I am engaged in shirt-making. I employ at 
this time from 30 to 40 hands—about two-thirds Chinamen and one-third 
women. 

The Chairman. Give us your idea with reference to the effect that 
Chinese labor has on your occupation. 

Mr. Kusel. The effect of Chinamen being here is to tend to keep 
white immigration away, and consequently machine operators in the 
shirt trade are difficult to get at the price that we can afford to pay, for 
the reason that a woman cannot make wages at machine operating un- 
less she works hard all day and works many hours. Very few women 
are strong enough to run a machine steadily all day. Women cannot 
stand it, although they do it in the East ; but there the women are fur- 
nished with motive power in all large manufacturing places, while here 
they have to use foot power. For my part I would furnish power to the 
women, but in such a case the Chinamen will work so much cheaper, 
that others in my trade who employ them would have an advantage 
over me and would be able to sell their goods cheaper than I would be. 

The Chairman. How long have you been engaged in the shirt- 
making business ! 

Mr. Kusel. Three years. 

The Chairman. Has there been a gradual encroachment in that busi 
ness by the Chinese % 

Mr. Kusel. Yes, a great one. 

The Chairman. Why do you employ Chinese! 

Mr. Kusel. For the reason that I cannot get white women to work 
for the price that I pay Chinamen, and I cannot afford to pay them any 
more because others would employ Chinese. Besides, the Chinese 
themselves make shirts and peddle them out all over the city, and al- 
most take my customers from me. There are hundreds of storekeepers 
in this city now who do not make a living. 

The Chairman. How much do the Chinese undersell you ? 

Mr. Kusel. I do not know that they undersell me greatly. I sell on 
credit and they sell for cash, aud perhaps they sell a little cheaper. I 
sell very little by retail. I sell to the storekeepers on credit, while the 
Chinese peddle out their goods and sell them at retail. In that way they 
injure me indirectly. 

The Chairman. Is there a great demand for employment by poor 
white women at your establishment J ? 

Mr. Kusel. Yes. The only employment that I can give to women 
is the finishing — making the button-holes and sewing the buttons on ; 
the work that is called finishing. Many women can work at that who 
cannot operate a machine. This work does not require so much physi- 
cal strength. The shirts which Chinamen make are finished by these 
women. 

Mr. O'Connor. Are there many white women out of employment- 
here. 

Mr. Kusel. Y r es ; if I advertise for finishers, I suppose that in the 
course of two or three days I can have 100 applying for work. Washing- 
is a great item in shirt manufacturing. Some three months ago two 
women started a laundry for lauudrying new shirts, which is altogether 
a different business from washing old shirts. Very few women here in 
San Francisco understand it. These women used to work in the Stand- 
ard Shirt Factory, a large concern here. They had some falling out, aud 
these two women set up for themselves. They understood their busi- 
ness first rate. They went around among the custom shirt makers who 



DEPRESSION IN LABOR AND BUSINESS. 313 

pay a little higher prices for laundryiug new shirts than is paid by the 
shirt manufacturers, and they procured work from a good many stores 
on Kearney street and Montgomery street. They had been paying $2.25 
a thousand to Chinamen for laundryiug custom shirts, and these 
women got a good many customers at a less rate. As soon as the China- 
men found that out they reduced their rate to 61.50 a dozen, 
and the women had to give up the business, because they could not 
laundry new shirts at that rate and live by it. Then the women came 
down to $2 and offered to do it at that rate, but I could not supply 
them alone with that class of custom shirts, and for stock shirts I could 
not afford to pay them 81.50, and as they could not work for that, they 
gave up the business. Since that time another woman started in and 
hired a girl on Missiou street, and I gave her work to do. As soon as 
I did so, a Chinaman who had been washing for me all the time gave 
up the work, saying that his men had gone back to China, and that he 
did not have bauds enough, but I subsequently went to his establish- 
ment and saw that he had six ironers at work, besides the washers, and 
then I knew that the only reason why he quit washiug for me was be- 
cause I gave some of my washiug to this woman. 

The Chairman. Do you find Chinese women employed in any kind of 
business ? 

Mr. Kusel. Yes ; they make button-holes. 

The Chairman. Have they any other occupation ? 

Mr. Kusel. So; not that I know of. They make button-holes and 
overalls and such thiugs; but I do not think they make a living by it. 

The Chairman. How do they procure a living ? 

Mr. Kusel. I think that all who work here are prostitutes. There 
are a few high-toned Chinese women here, but they do not work at all. 

The Chairman. Do you say that the bulk of the Chinese women in 
this city are prostitutes ? 

Mr. Kusel. Yes ; I believe that ninety-nine out of a hundred are. 

The Chairman. How many of them are there here ? 

Mr. Kusel. That I cannot" tell. 

The Chairman. Are there thousands ? 

Mr. Kusel. I do not know. I pass through Chinatown occasionally 
and I see them at the windows and doors. 

The Chairman. They have a little square hole, I believe, which they 
look through ? 

Mr. Kusel. Yes. I have also farmed in California for twenty years, 
and I can give you some information in regard to farming. I employed 
Chinamen and white men there, and I think that the presence of China- 
men tends greatly to demoralize farm-hands in California. Their sole 
aim appears to be to run white men out. If you have no white men on 
the farm, a Chinaman will not do more than half a day's labor ; but as 
soon as there is a white man employed, the aim of the Chinaman is to 
do better than the white man, in order to get the white man out of the 
place. It is the same in the city. The Chiuese just organize in opposi- 
tion to the white race. The Chiuese are the greatest strikers for wages 
that can be found anywhere, but their aim is to underbid the white man. 
They never come down in their prices for any otuer reason. 

Mr. Martin. Is it true that they are better farm-hands than Ameri- 
cans ? 

Mr. Kusel. I did not say that. 

Mr. Martin. You say that they do more work. 

Mr. Kusel. I say that when they have a white man working along 



314 DEPRESSION IX LABOR AND BUSINESS. 

side of them, they try their best to do better than he does so long as he 
is there. The Chinese are the greatest frauds. 

Mr. Martin. As long as a Chinaman and an American are working 
together, the Chinaman will do better work than the American, will he ? 

Mr. Kusel. ^No, I did not say that. I say he tries to do better than the 
white man. In harvest times where eight white men would do the work 
of handliug grain with a pitchfork, it will always take twelve Chinamen 
to do the same work, even when they are trying their best. la certain 
kinds of work eight Americans will do as much as twelve Chinamen ; 
but then there are other certain kinds of work, such as digging ditches 
or stumping out trees, in which the Chinese as a class will outwork the 
whites as a class. When it comes to chopping wood, however, one 
white man will do as much work as six of the best Chinamen ; but when 
it comes to the grub-ax or spade, I think that a Chinaman will beat an 
Ame ican. I consider the Irishman to come next in that class. 

Mr. Martin. Are not the Irish laborers the best workers in the world 
with the spade ? 

Mr. Kusel. I believe that the Chinamen can beat the Irish with the 
grub-ax and spade and shovel and digging in mud. They stand the stoop- 
ing position best. 

Views of Mr. E. W. Slessmger. 

Mr. E. W. Slessinger came before the committee. He said, in reply 
to preliminary questions : I have been here on this coast for twenty 
years. I am in the boot and shoe business, and have beeu in that busi- 
ness on my own account for seven years. 

The Chairman. What is the condition of that business, and how is 
it affected by Chinese labor % 

Mr. Slessinger. Our business was all in good shape, and we were 
doing well until the Chinamen got into the manufacture of boots and 
shoes, and they are getting away with us. 

The Chairman. When did the Chinamen make the first serious as- 
sault on your business % 

Mr. Slessiinger. Within the last five years, but mostly for the last 
three years. 

The Chairman. Is your business growing worse % 

JVIr. Slessinger. In certain lines of goods the Chinese have driven 
us out altogether. We cannot manufacture those goods any more by 
white labor, because the Chinese dispose of them for less than the stock 
costs us. How they do it I do not know, but it is done. If the Chinese 
pay for the stock which they use I do not know how they do it. 

The Chairman. How large a business are you conducting now ? 

Mr. Slessinger. We have had a little over 200 men at work right 
along; now we have not got half that number, and the number is 
growing less every day. The Chinese are selling goods all over the 
country, peddling them out regardless of cost just to raise money. I 
notice that our tanners here* have been of late supplying the Chinese 
with goods on credit, which they never did before. The Chinese are 
very unreliable in matters of debt. A Chinaman will come into a tan- 
ner's establishment and say, " Here is my card. I do business at such 
and such a number on Commercial street or on Clay street. My name 
is Hy Wong. I want to buy goods at thirty days' credit." Afterwards, 
when the tanner goes to collect his bill, he finds that there is no Hy 
Wong at that number, and that is the last of his money. 



DEPRESSION IX LABOR AND BUSINESS. 315 

Mr. Martin. The Chinaman would not fool that tanner any more, 
would be ? 

Mr. Slessinger. No ; I presume uot. The Chinese imitate low- 
priced goods so that white men cannot come near them in poiut of 
cheapness. 

Mr. Martin. Do you manufacture for wholesale business? 

Mr. Slessinger. For wholesale business entirely. 

Mr. Martin. And you have now about 100 persons employed ? 

Mr. Slessinger. Yes. 

Mr. Martin. What wages do you pay them at present ? 

Mr. Slessinger. I presume they will average $3 a day — good me- 
chanics in the shop — and outside labor about $2. 

Mr. Martin. What did you pay the same class of men before this 
competition overtook you? 

Mr. Slessinger. About 83 and $3.50 for skilled labor — for the best 
workmen. Outside labor we paid about the same. 

Mr. Martin. Do you employ any Chinese ? 

Mr. Slessinger. We have about ten Chinamen to do the dirty work 
of the establishment — washing and scrubbing, &c. 

Mr. Martin. Why do you employ these ten or twelve Chinamen in 
preference to white men ? 

Mr. Slessinger. We cannot get white men to take their places at 
present. We can get boys and break them in. 

Mr. Martin. What work is it, that you employ them at ? 

Mr. Slessinger. Hammering out soles and cutting out pieces, &c. ; 
light work. But as to making boots, or anything of that kind, we have 
no Chinamen employed. All our goods are made by white labor. 

Mr. Cowgill. You say that you cannot get white men to hammer out 
leather? 

Mr. Slessinger. O, yes. We can break in boys; but we cannot 
get the men exactly when we waut them. 

Mr. Cowgill. Why not, if labor is so plenty here ? 

Mr. Slessinger. Laboring men are leaving here every day: they 
are going east. 

Mr. Cowgill. I thought there were thousands of men here that were 
not employed ? 

Mr. Slessinger. There are a great many good workmen here unem- 
ployed. 

Mr. Cowgill. It does not require much skill, I suppose, to hammer 
out leather and to cut scraps? 

Mr. Slessinger. Xo; but we have first to teach them how to do it. 
When you have a business, and when everything is in running order, 
it is not always convenient to put green men into a place. 

Mr. Cowgill. Could you not put white men into these places 1 

Mr. Slessinger. We are doing it every day : but we cannot get them 
all at once. 

Mr. Cowgill. It would not take you long to get ten or twelve men ? 

Mr. Slessinger. Sometimes it does; to get men of the right kind. 

Mr. Coy\ t gill. Is not one of the troubles that you are laboring under 
here that a great many of the white men who are out of employment 
will not work unless they get exorbitant rates of wages ? 

Mr. Slessinger. They do not like to work for 81.50 a day. They 
want to make 82 and 8-. 50 a day. Some of them who come in say that 
they have families, and that they cannot support their families on 8L50 
a day. 



316 DEPRESSION IN LABOR AND BUSINESS.. 

Mr. O^Connor. Is the trade and business of California in a depressed 
condition? 

Mr. Slessinger. Not at present. 

.Mr. O'Connor. Has it been recently ? 

Mr. Slessinger. Not this year; I have not found it so. 

Mr. O'Connor. Was it so last year ? 

Mr. Slessinger. Last year it was better than this year in our line. 

Mr. O'Connor. Therefore your business is more depressed now than 
it was a year ago % 

Mr. Slessinger. Yes ; and two years ago it was still better. 

Mr. O'Connor. What is the general condition of business in this city ? 

Mr. Slessinger. Business men who are manufacturing all seem to 
complain, but people who are importing are in better spirits./ 

Mr. O'Connor. Is there any immigration of labor from the East to 
this point ? 

Mr. Slessinger. Laborers in the East are all told to stay away, as 
Chinamen are getting away with white men. I have just come back from 
Boston, and while in the East I visited the manufactories at Lynn. The 
workingmen there are all well posted about our manufacturing here. I 
asked several of the workingmen whom I met there to come here where 
they would get better wages. They said "No; Chinamen will play out 
all the workmen there." 

Mr. Martin. Is it your opinion that if these men were to come here 
they would get employment ? 

Mr. Slessinger. In some fine goods they might, but when it comes 
to staple goods they could not. At present there are from 150 to 200 
Chinese boot and shoe factories in this State, and sooner or later we 
have all to step out of the business. 

Mr. O'Connor. What do you propose as a remedy I 

Mr. Slessinger. That is hard to state, unless the government takes 
hold of the matter and makes the Chinese pay the taxes that we pay, 
and makes them live as white men live. That would remedy the evil. 

Mr. Martin. Do not the Chinese pay their taxes? 

Mr. Slessinger. I presume that some of them do and some do not. 
One difficulty is, that you cannot tell one Chinaman from another. 
They all look alike and all appear to have the same names. 

Mr. Martin. They pay taxes on what property they have, do they 
not ? 

Mr. Slessinger. That property is very little. The property goes out 
of their hands just as soon as it is manufactured. YTou never see any 
of it. I would not trust one of these Chinamen with a five-cent piece. 

The Chairman. For what reason would you not trust him ? 

Mr. Slessinger. Because I do not think I would ever get a cent from 
him. 

Mr. Martin. Would you ever find him when you went to look for 
him? 

Mr. Slessinger. That is very hard to tell. I have had several cases 
of that kind. 

Mr. Martin. Do you employ any Chinese women ? 

Mr. Slessinger. No, sir; I think they are a bad egg. 

Views of Mr. Alexander Dunbar. 

Mr. Alexander Dunbar came before the committee. He said in 
reply to preliminary questions : I am at present engaged in writing a 
work, but I have been engaged in mechanical business, and I have em- 



DEPRESSION IN LABOR AND BUSINESS. 317 

ployed a good many men since I have been in this city. I have lived 
here five years. I have traveled somewhat through the State. The first 
year that I was here I traveled nearly all the time. I came here from 
Canada. I have been in this country since 1864. I have been at Wash- 
ington. I had a' contract for laying the water-main in Washington — the 
two sections adjoining the city of Washington. I have been brought up 
an agriculturist, and I worked as a railroad contractor. The govern- 
ment paid me $j!5,000 for my services for oue year. 

Mr. O'Connor. In what capacity? 

Mr. Dunbar. In the science of veterinary surgery, in connection with 
the treatment of horses' feet, and I gave great satisfaction. I have a 
report from the War Department, after a year's service, that my en- 
gagement was an entire success. 

Mr. CoWGiLL. You have been in this room most of the time during 
the investigation. If you know any depression of labor in this part of 
the country, state what it is and what its causes are, and what remedy 
you have to suggest for it. 

Mr. Dunbar. There is a periodical depression every 20 years. We 
;are in it at this time and are just getting out of it. We went through 
the very same process in 1857, 1837, and in 1817 and in 1787, and so 
back in English history from the beginning of civilization. This present 
depression was enhanced by the panic of 1873, and that was caused by 
the interference of the Wisconsin legislature with the railroads. I think 
that the introduction of the Chinese into this country is a great injury 
to white labor, just as the introduction of labor-saving machinery is an 
injury. Chinamen enhance the difficulty, but yet they have done much 
service in this country. Tney have done much work which would not 
have been done without them. 

Mr. Martin. What caused the depression of business in 1873 ? 

Mr. Dunbar. The Wisconsin legislature passed an act in regard to 
railroad matters and that act affected the Northern Pacific Railway. It 
frightened the Northern Pacific bondholders and stockholders in Austria 
and they refused to buy any more bonds, and sent back those which 
they already had to England. They were put in the market there, and 
that broke down Jay Cooke & Co. ; and Jay Cooke's failure upset the 
banking system in this country, and that upset real estate and brought 
on these troubles, which continue to the present day. Confidence, which 
is the living and acting capital of small banks, has been destroyed by 
agitators, and by this depression, and by the sale of those securities. 
But these periodical prostrations come under the law of supply and de- 
mand. Manufacturers never calculate how much they ought to manufac- 
ture. All the work is done by guessing, and thus' there is a surplus of 
manufactured goods. 

The Chairman. Come down to the Chinese question. Give us light 
on that. 

. Mr. Dunba.r. The Chinese do not work on farms at anything which 
requires the work of good white men. The only work that they are em- 
ployed at is light work in vineyards and in the cultivation of vegetables 
and the like. They are not engaged in raising wheat or in the thrashing 
of it; it passes into the sack before the Chinamen are engaged on it. 
Chinamen are only used where white men will not work or cannot be got, 
because one white man is worth three Chinaman. But in this particular 
light work the Chinameu, are better and more reliable than white men, 
because Chinamen are always on hand ; white men love a little pleasure, 
and 1 do not blame them for it. The climate is one of the particular 



318 DEPRESSION IN LABOR AND BUSINESS. 

tbings in the question, because you cannot carry on a small farm here 
without irrigation. 

Mr. O'Connor. Is the competition of Chinese labor with white labor 
on the Pacific coast detrimental to the progress and prosperity of labor ? 
Mr. Dunbar. Certainly ; when the labor market, is overcrowded. 
There is room here for some Chinamen, but others are doing work which 
ought to be done by white men. If our goods are brought here from the 
East, and if the goods produced by tke Chinese are sold at exactly the 
same price, then the advantage is with California. If the Chiuese do 
import most of what they eat, they have to pay duties upon it and freight; 
but there are a great many indirect benefits from their presence here. 
They have done much in reclaiming laud which would not have been 
reclaimed without them. Men get land cultivated here by Chinese labor 
which no white man would touch. They give this land to the Chinaman 
for a good number of years to reclaim and then they take it from them. 
There area good many good things which the Chinese do, but still I 
think that they are very much in the way of the working white men. 
On the whole, the workingmau's grievance here is not aggravated. 

Views of Mr. Samuel Lewis. 

Mr. Samuel Lewis appeared before the committee. He said in re- 
ply to preliminary questions : I have been here on the Pacific coast since 
1859. For the last ten years I have been carrying on the cigar-making 
business. I am one of the firm of Lewis Brothers. 

The Chairman. State the effect of Chiuese labor on the cigar busi- 
ness. 

Mr. Lewis. Within the last sixty days we have not been manufactur- 
ing; we have stopped work aud are going out of the business. The com- 
petition is so great in that line of business that it fails to pay. China- 
men will work for one another cheaper than they will work for white 
men, and therefore Chinese manufacturers can undersell the white manu- 
facturers. The Chinaman will work longer hours than the white man, 
and iu that way he can work cheaper for the Chinamen than he can for 
white men. 

The Chairman. How long have you been in business asa cigar maker 
in this city % 

Mr. Lewis. About 12 years. 

The Chairman. Have you retired from the busiuessin consequence of, 
Chinese competition ! 

Mr. Lewis. Yes, sir ; to a certain extent. 

The Chairman. Have you been in the habit of employing many men in 
your business ? 

Mr. Lewis. Yes, sir; for the last few years we have employed from 
50 to 150. We have employed as many as 350 or 100. 

The Chairman, What proportion of those were Chinamen ! 

Mr. Lewis. I suppose that 90 per cent, were Chinamen. For trust- 
worthy positions., such as bookkeeper, foreman, assistant bookkeeper, 
&c, we have had white men. 

The CHAIR3IAN. The time has come when you cannot even employ 
Chinese labor profitably \ 

Mr. Lewis. Xot in that particular line, because Chinamen work 
cheaper for other Chinamen than they do for white men. Chinamen 
work day and night. If you walk around the town in the evening from 
six to twelve and one o'clock at night you will find Chinese wash-houses 
in full operation. White men and women cauuot stand working that 



DEPRESSION IX LABOR AXD BUSINESS. 319 

number of hours; but tbe Chinese seem to require less sleep than white 
men do. They can live on less. Rice is the cheapest food and the Chi- 
nese can live on it altogether, so that white men cannot compete with 
them. 

Mr. O'Connor. You think that the white labor cannot come in com- 
petition with Chinese labor without going to the wall ! 

Mr. Lewis. It cannot. I consider the presence of the Chinese here as 
a damage to the working classes of our population, and as detrimental 
to all classes of it. I think that their presence here affects injuriously 
the value of real estate, because it checks public improvements. If we 
had half the number of white men employed on this coast that there are 
Chiuamen, the money which they would earn would be put in circula- 
tion. Their savings would go to the banks and would be loaned 
in turn to parties for investment in real estate. But just the reverse 
is the case, and the Chinaman's sole aim and object in coming here is to 
save money and go back to China. In fact, one of the rules and regula- 
tions under which they leave their country is that they shall return to. 
it dead or alive. If they die here their bones are sent back to China. 
Chinamen put no money in the savings banks. Their sole aim is to ac- 
cumulate as much money as possible and to return to China as soon as 
possible; while, on the other hand, white men come here with the pur- 
pose of making it their homes. Cincinnati has been built up principally 
by the working classes. Now, if we were to depend upon the Chiuese 
building up San Francisco we would never have a city. That is an un- 
disputed fact. I do not believe that there is a Chinaman among the 
depositors in savings banks. The amount of money that is being con- 
tinually sent to China shows that the Chinese are sucking the life-blood 
out of the State. I am not particularly prejudiced against the Chinese ; 
they are a very industrious people ; but I like the white man better. 
White immigrants assimilate with us ; they adopt our manners and cus- 
toms, but the Chiuese do not. A little Chinaman down here in China- 
town, Ah Quin, has got a little-fooc woman and a big-foot woman, two 
wives. I think nothing of that ; it is their custom. But the Chinese 
here, as a rule, do not marry; and there is no natural increase of the 
Chinese population. I think it would be a benefit if the labor that is 
done by the Chinese here was given to the white people. An increase 
of population is what we want. Then, again, I would not believe a Chi- 
naman under oath. 

The Chairman. What remedy have you to propose for this evil ? 

Mr. Lewis. I think that the bill which passed Congress would be a 
pretty good remedy. I think that if Chinese immigration were limited 
to a certain number, as in that bill, ten or fifteen on each steamer, that 
limitation, together with the natural decrease of the Chinese popula- 
tion now here by death, would in the course of time eradicate the evil. 

Mr. Cowgill, You said that you would not believe a Chinaman un- 
der oath. Do you mean that they disregard the obligations of an oath ? 

Air. Lewis. I do not believe that they know anything of the obliga- 
tions of an oath. Their form of taking the oath is by cutting off the 
head of a rooster. 

Mr. Cowoill. Cau you rely upon what they tell you iu their business 
relations? If you make an inquiry of them on any given subject, do 
you believe that they would tell you the truth ; or are they utterly re- 
gardless and reckless in the matter of telling the truth ? 

Air. Lewis. I think there may be exceptions, but as a general rule I 
do not thiuk I would believe them. 

Mr. Cowgill. You think they are not worthy of belief ? 



320 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Lewis. Not as a general thing. That is my candid opinion. 
I have tried to make confidants of Chinamen in one or two instances, 
but I found out that whatever I told them they did not regard as a 
secret. 

Mr. O'Connor. Is trade and the business of California at present in 
a depressed condition 1 

Mr. Lewis. Yes, sir; and has been very much so for the last two or 
three years. 

Mr. O'Connor. Are the laboring classes in a state of contentment or 
in a state of agitation J ? 

Mr. Lewis. There has been agitation more or less on the subject of 
the Chinese for a long time, and there are good reasons for it. If you are 
a working man, for instance, you know that the presence of the Chinese 
among us is a detriment to you and your family, and you naturally 
speak of it in the presence of your family. The consequence is that the 
children speak of the Chinese in a disrespectful sort of manner, and they 
do not have auy hesitation in throwing stones at Chinamen as they pass 
through the streets. I believe that the children of laboring meu in this 
country would be much better in every respect, morally, intellectually, 
and in every other respect, if there were no Chinese here. 

Views of Mr. Patrick J. Healy. 

Mr. Patrick J. Healy came before the committee. He said : The 
•causes of the depression in labor are general, not special, in their na- 
ture. The world has suffered from stagnation in trade j California is 
not an exception. We are better off here than iu any other State in the 
Union, notwithstanding the presence of the Chinese. The presence of 
the Chinese here is no more of an evil than the application of electricity 
and steam to the arts and sciences. All these agencies have a tendency 
in the same directiou, that is to cheapen production. Either of these 
respective agencies would bring about the same result, only that a 
longer time would be required. The subdivision of labor consequent 
upon the discovery of steam revolutionized the old system of industry. 
The era of master and apprentice passed away and never can be re- 
stored. The telegraph struck the death-blow to speculative commerce, 
and hereafter more exchanges of products will take place with less 
friction than in the past. The telegraph, rapid transit, and the subdi- 
vision of labor would, in themselves, compel a reorganization of society, 
so far as production and consumption are concerned ; and no matter 
what may be said of other matters, production and consumption are the 
two main factors in modern society. The great problem for the individ- 
ual is to get the maximum of compensation for the minimum of toil. 
That is the problem for nations as well as individuals. We are all has- 
tening this minimum of cost in production, consciously or unconsciously, 
but with a good deal of unnecessary friction. The proper way to act is 
to become convinced that the foregoing statement is true, and we can 
hasten the ultimate result harmoniously. To do this scientifically, it 
is necessary that we have universal peace ; that no man shall be inter 
fered with in working all the hours he pleases and for what wages he 
pleases. But eo-relatively with this freedom to toil we must have free 
laud, free speech, and free money. Give us this freedom, coupled with 
responsibility, and the rest will take care of itself. When I say free 
land, I mean it absolutely. I mean that no so called u vested rights n in 
land shall exist in opposition to the natural unalienable right of indi- 
viduals to life and its necessities. I mean that personal occupancy 



DEPRESSION IN LABOR AND BUSINESS. dZl 

shall be the only title to land, and that land itself must be taken out of 
the category of property. I mean that no one shall be allowed to buy 
land or sell land on any condition whatever. Then Shylock will loose 
his grasp upon the throat of progress, and money will become a medium 
of exchange — its natural function, and not a measure of value — its 
fatal quality. Free trade must also be absolute — both national and 
municipal. No custom-house must exist as a barrier between the pur- 
chaser aud consumer. No license must be collected from any one in 
city or State, whether he does or does not use a one or two horse vehi- 
cle in his business. No tax-gatherer muse be employed by the govern, 
ment. Every man must be his own assessor, pay his pro rata of taxes- 
and take the consequences. Freedom aud responsibility will be the rally- 
ing cry in the new order of things. Suffrage must be restricted to 
those who hold real-estate property, and the holding of such property 
must be uuiversal, otherwise responsibility cannot exist. Free speech 
must exist without let or hinderance, always remembering the responsi- 
bility. This may seem like radical and visionary talk, but if you try to 
explain the Jablochoff candle to the Patagonian, see whether he will 
not think you mad. In my opinion, this committee is of more impor- 
tance than the convention which formulated the Constitution of the 
United States. But before this committee gets through with the ques- 
tion before it, it must be enlarged until it embraces representatives 
from all governments with which we hold commercial relations. The 
states-general must be convened upon a universal basis; and it will be 
found, before they get through, that their action must rest upon the 
eternal verities, or it will be as useless as the vapid mouthing of an anti- 
coolie club. The social and industrial world is in travail, and woe be 
unto those who would force a premature or lalse issue. It will be the 
wheel that will grind them to powder. Events are pushing on to this 
focus, and we cannot avert their effects if we would. But let no one 
despair. Anarchy will not ensue, except the temporary analytical an- 
archy which is the prelude to synthetical order. Before this large com- 
mittee of which I speak gets through its labors, we shall have an agree- 
ment that speculative commerce has had its day ; that commerce for 
financial profit must cease, and that an equitable exchange of service 
for service is what the world hungers for. 

The Chairman. You have given us a disquisition which contains 
some truths and some errors. But how do you apply it to the present 
condition of things ? 

Mr. Healy. The application of it is to let the Chinese severely alone, 
and to mind our own business. 

The Chairman. But suppose that the Chinese come here in such 
swarms as to turn out the white men and to monopolize all the business 
occupations in the State? 

Mr. Healy. They never do come in such swarms. They come in 
obedience to the law of demand and supply; and they do not come when 
they are not wanted. 

The Chairman. Are they not increasing in numbers ? 

Mr. Healy. And so are white people increasing, and their wants are 
increasing in like ratio. We are importing more boots and shoes now 
from Massachusetts than we ever did before in any other previous year, 
and we are producing more Chinese work than we ever before produced 
on this coast. Now, if Chinese cheap labor is so detrimental, why is it 
that Massachusetts cheap labor can compete successfully with it, pay- 
H. Mis. 5 21* 



322 DEPRESSION IN LABOR AND BUSINESS. 

ing heavy freights to the railroad companies ! I ask the members of 
this committee to explain that fact. 

The Chairman. But treat the Chinese question as a political ques- 
tion. Suppose that the Chinese population in this State shall increase in 
numbers so as to assume the political power of the State, would you be 
willing to submit to that condition of affairs % 

Mr. Healy. I would be willing to treat them the same as any other 
human beings, and to compete with them on the same conditions. I 
would be willing to grant them the same privileges as I enjoy myself on 
the same conditions, I would be willing to grant them the ballot, the 
safety which was granted to the negro. 

The Chairman. According to your idea, would you regard it healthy 
for the rest of the country for paganism to become the order of the day 
in California % 

Mr. Healy. Yes, sir; essentially so. Paganism is just as moral a 
religion as the religion which is now practiced in California, where the 
ministers of the gospel are stock-sharps and land-thieves, as the records 
of the city will prove. 

The Chairman. Do you measure morals in California by the morals 
of the rest of the United States ? 

Mr. Healy. I measure the morals of California by itself; it is a pe- 
culiar State. Most of the people come here to avoid hard labor, and 
to get something for which they would not have to work hard. They 
were of a speculative character, and they have not lost that character. 
You can see three licensed institutions here in the middle of the city 
where there is more fraud and more dishonesty carried out and incul- 
cated than there is in all Chinatown. 

The Chairman. What remedy have you to bring the State back to a 
moral condition % You say that it has lost its morality ? 

Mr. Healy. Ko, sir ; it never had any. 

The Chairman. What remedy would you adopt to bring it to a 
healthy, sound condition ? 

Mr. Healy. The remedy is that every man should work for his living, 
and be compelled to do it, or starve. 

The Chairman. And if a majority of the population say that pagan- 
ism should prevail, you would have pagauism prevail ? 

Mr. Healy. Yes, sir; that is the American system of government. 

Mr. O'Connor. How long have you been an American citizen J ? 

Mr. Healy. 1 have been in this country twenty-six years, and have 
been an American citizen since 1865. 

Mr. O'Connor. Of what country are you a native \ 

Mr. Healy. I am a native of Ireland. 

Mr. O'Connor. Do you hold the Mongolian to be the equal of the 
Caucasian % 

Mr. Healy. Yes, sir; and in some respects the superior. Your evi- 
dance taken here proves him to be the superior. 

Mr. O'Connor. Do you consider a human being who can live simply on 
rice the equal of a human being who requires different aliments to sus- 
tain human life % 

Mr. Healy. In that respect he is superior. 

Mr. O'Connor. You therefore think that people who are vegetarians 
are a higher order of beings than people who live on animal food % 

Mr. Healy. If they can perform the same amount of labor they cer- 
tainly are, because a vegetarian diet is more in accordance with science. 

Mr. O'Connor. Then you measure the quality of a people by the 
amount of labor that they can perform % 



DEPRESSION IN LABOR AND BUSINESS. 323 

Mr. HeAly. That is the modern idea. 

Mr. O'Connor. Who started that modern idea I 

Mr. Healy. It has not been started ; it is a growth. It is the tend- 
ency of things. 

Mr. O'Connor. Have you visited the Chinese quarter in this city ? 

Mr. Healy. Yes, sir, hundreds of times ; at all hours of the day and 
night. 

Mr. O'Connor. Have you been edified by the spectacles you have 
seeu there ? 

Mr. Healy. Not any more than I have been in passing through the 
filthy slums of New York City and other Eastern cities where the same 
characteristics prevail. 

Mr. O'Connor. Have you ever seen in New York forty men sleeping in 
a room 15 feet by 20 ? 

Mr. Healy. I have never seeu that here. 

Mr. O'Connor. Have you been in their sleeping quarters here in 
China town ? : 

Mr. Healy. No, sir ; I can believe the reliable testimony of other 
witnesses without having the odor myself. 

Mr. O'Connor. Then you have not made a thorough inspection of 
the Chinese quarter? 

Mr. Healy. I have been on the outside of it a thousand times ; I have 
not dived to the bottom of it; - 1 have looked in, and I have been at 
their New Year's ceremonies and partaken of refreshments, and all that 
sort of thing. * 

Mr. O'Connor. Do you believe a race of people that does not recog- 
nize the law of marriage as binding to be the equal of a race of people 
which does recognize the law of marriage 1 

Mr. Healy. 1 have no evidence that the Chinese do not recognize 
that law. 

Mr. O'Connor. Do you know the proportions between males and fe- 
males constituting the Chinese population in San Francisco J ? 

Mr. Healy. I do not know that fact either. 

Mr. O'Connor. Do you kuow that out of a population of 32,000 
Chinese there are only 2,000women ? 

Mr. Healy. I have no reliable evidence of that fact. 

Mr. O'Connor. You have no reliable evidence of anything. 

Mr. Healy. Yes ; I have reliable evidence that this committee is now 
in session. 

Mr. O'Connor. You have clear demonstration of that. 

Mr. Healy. Y^es. 

Mr. O'Connor. Do you believe in statistical knowledge % 

Mr. Healy. Yes; to a great extent. 

Mr. O'Connor. If the census of the population of San Francisco shows 
that there are 32,000 Chinese in this city would you believe that ? 

Mr. Healy. It would depend a good deal upon who took the census. 
If it was taken by a man who was opposed to Chinese immigration I 
would not believe him. 

Mr. O'Connor. What business do you perform ? 

Mr. Healy. I am a shoemaker. 

Mr. O'Connor. Are you a journeyman shoemaker \ 

Mr. Healy. I am, and have been for twenty five years. 

Mr. O'Connor. Are you engaged in that business now ? 

Mr. Healy. I have been up to the 12th of last July. 

Mr. O'Connor. What are you doing now I 

Mr. Healy. I am now studying law. 



324 DEPRESSION IN LABOR' AND BUSINESS. 

Mr. O'Connor. Have you ever been employed by the Chinese ? 

Mr. Healy. Never. 

Mr. O'Connor. You have never done any work for them ? 

Mr. Healy. Never. 

Mr. O'Connor. How do you study law and manage to support your- 
self at the same time ? 

Mr. Healy. I get up at two o'clock in the morning and I carry morn- 
ing newspapers for four or five hours, and thereby obtain a living to 
enable me to study law. 

Mr. O'Connor. From your observation you thiuk that the admixture 
of Mongolians with the American race would be rather advantageous 
than otherwise ? 

Mr. Healy. Not necessarily advantageous ; it is a neutral mixture. 
Everybody comes here for his own benefit. The Chinese come here for 
their benefit ; I came here for mine. The Jewish people will not mix 
with us. I very seldom hear of a Jewish maiden being married to an 
Irishman, and yet we fiud no fault with the Jews on that account. 

Mr. Cowgill. You do not try to drive them out of the country? 

Mr. Healy. No, sir. 

The Chairman. You would not approve of a cross between Irish and 
Mongolians? 

Mr. Healy. If it is their volition I would have nothing to put in the 
way of it ; it would be an admirable cross. 

The Chairman. What would it produce? 

Mr. Healy. It would produce a race of human beings that would be 
the terror of the world. 

Views of Mr. T. B. O'Brien. 

Mr. T. B. O'Brien appeared before the committee. He said, in reply 
to preliminary questions: I have resided here six years, and am a miner 
by occupation. 

The Chairman. How does Chinese labor come in conflict with white 
labor in mining operations ? 

Mr. O'Brien. In 1873 I and two others were employed in this city to 
go over to Alameda to prospect for a quarry. I had never come in con- 
tact with the Chinese until then. We remained until we had developed 
the ledge of the rock. After we had developed the rock and done the 
most critical portion of the work the contractors who had the quarry, 
and who had also the contract for macadamizing several of the streets 
in Oakland, introduced Chinamen into the quarry. There were six or 
seven white men then working there. The Chinamen were invariably 
put to the light portion of the work. We had large drills from 15 to 16J 
feet and an inch and a quarter in diameter to turn around, and the 
work used to contract the muscles of our hands. The Chinamen would 
not turn these drills. They had the work of a striking-hammer, and 
that is the lightest work in mining. Before the Chinamen were intro- 
duced into camp we had a clean camp, but after they came in some sort 
of disease broke out among the Chinamen, and one of them died. I was 
called upon, in conjunction with several others, to go and examine the 
dead man, and we were subpoenaed as a coroner's jury. I refused going 
because I thought that the man had died of some sort of a contaminat- 
ing disease that was infectious, but I was told that I had to go. Finally, 
I consented and went in ; and when I got out the foul air inside acted 
as a sort of emetic on me. I got sick and I left the place and went to 
Mount Diablo, and I staid there for eighteen months mining. 



DEPRESSION IN .LABOR AND BUSINESS. 325 

The Chairman. What is the effect of Chinese labor coming in compe- 
tition with yonrs ? 

Mr. O'Brien. The effect in Oakland was that it drove white miners 
out, and that the Cbiuamen got possession of that quarry. Then I went 
to Caliente in 1875, and worked on a railroad tunnel there. We were 
running a tunnel through a mountain. The Chinamen worked in one 
end of the tunnel, and we had to penetrate a perpendicular side of the 
mountain. At that time there were between four and five thousand 
Chinamen employed on the Southern Pacific Railroad. We had to pen- 
etrate through a perpendicular cliff in the mountain. The Chinese 
would not venture there until there was an opening made through the 
mountain, and in the other end the Chinamen were employed. When 
we found out that the object of the contractors was to have us penetrate 
through the mountain and then to get the Chinamen in to work we left. 

The Chairman. Why ? 

Mr. O'Brien. Because we knew very well that after we had got in a 
secure distance through the mountain we would be discharged and 
Chinamen would be put in our place. 

The Chairman. Why ? Did the Chinamen receive less wages than 
you did ! 

Mr. O'Brien. Yes. They received only a dollar a day, and we were 
receiving from $35 to $40 a month and board. 

The Chairman. Then the consequence was that the Chinese labor 
drove you out? 

Mr. O'Brien. Yes. 

Mr. Cowgill. What was there to hinder you from exacting what- 
ever wages you thought proper when you were doing the kind of work 
which nobody else would do ? 

Mr. O'Brien. We asked the contractor what our wages would be, 
and he eluded our answer, and said that the superintendent of the road 
would be around and would fix that. We had not intended to work for 
the wages he gave us. In Dutch Flats, in 1873, the miners were re- 
ceiving $3 a day; now they are receiving only from $2 to $2.50 a day, 
the reduction being caused by the introduction of Chiuese. There are 
also several placer mining camps in this State where Chinamen are em- 
ployed, and from which the white men have been driven out. 

The Chairman. So far as your knowledge extends throughout the 
mining country, has Chinese labor generally taken possession of the 
work to the exclusion of white labor J ? 

Mr. O'Brien. In certain localities it has. When a man wishes to 
patronize the Caucassiau race he has the work done by white men. 
But where Chinamen are employed through the instrumentality of the 
six Chinese companies white labor has been displaced. 

The Chairman. Are you engaged in mining now ? 

Mr. O'Brien. No, sir ; not at preseut. 

The Chairman. Why ? 

Mr. O'Brien. I have given it up. I have gone into a holier cause. 

The Chairman. What is that? 

Mr. O'Brien. I am engaged in the labor agitation. 

The CHAIR3IAN. Then you cannot get employment at mining at what 
you regard as fair compensation ? 

Mr. O'Brien. No, sir. I do not regard $2 or $2.50 a day a fair com- 
pensation at mining- work, for twelve hours a day. 

Mr. Gowgill. What did you say your employment is at the present 
time ! 

Mr. O'Brien. I am not employed as a miner at the preseut time. 



326 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Cowg-ill. What is your business now! 

Mr. O'Brien. I am identified with the labor party at the present time. 

Mr. CowGriLL. In what capacity ? 

Mr. O'Brien. As an organizer. In Virginia City, where they have got 
a white league, or an organization called the Miners' Union, the origi- 
nal wages of $4 a day are still retained, because miners have protested 
against allowing the introduction of Chinamen to the Gold Hills. They 
marched out and entered their protest against employing Chinamen. 
The Miners' Union of Virginia City and of Gold Hill does not allow 
Chinamen to go under ground, and consequently the miners there re- 
ceive the original wages of $4 a day. They have had to organize a Cau- 
casian club in Dutch Flats. The Chinese had become so obnoxious on 
account of the debauching of young .boys, and of the introduction of 
contagious diseases, that they were driven out of the town, and are now 
restricted to a mile beyond the town limits. 

Mr. Martin. What would be your remedy for the evil of Chinese im- 
migration ? 

Mr. O'Brien. The abrogation of the Burlingame treaty. 

Mr. Martin. Would you stop at that f 

Mr. O'Brien. I would not. First, I would have the abrogation of the 
Burlingame treaty. Secondly, I would have colonies of immigrants from 
the Eastern States in this State, where individuals- own one hundred 
thousand to three hundred thousand acres of land. 

Mr. Martin. How would you get that land away from the owners? 
Do you think that you would have a right to place eastern immigrants 
on those lands? • 

Mr. O'Brien. No, sir. I would have the State issue bonds and pay 
the present owners of these lands a proper compensation for them. 

Mr. Martin. Would you require the State to compel the owners of 
large tracts of land to sell their land ? 

Mr. O'Brien. No, sir. I would have the State contract a loan in order 
to place immigrants on the land, and I would give the owners a reason- 
able compensation at government prices for the land. 

Mr. Martin. Suppose a gentleman had'50,000 acres of land. What 
means would you adopt so that immigrants from the East should go upon 
and occupy that land? 

Mr. O'Brien. I would say the State should give the owner a reason- 
able compensation. 

Mr. Martin. But if the owner does not want to sell the land, what 
would you do in that case? 

Mr. O'Brien. Then I would make the owner comply with the re- 
quirement of the new constitution, which was adopted by 11,000 majority, 
and which provides that the land shall be equally taxed. 

Mr. Martin. You might tax the land, but can you take it away from 
the owners ? 

Mr. O'Brien. No, notconstitutionally. The last witness (Healy) stated 
that the Chinamen are wanted here. I ask this committee to take 
into consideration the fact there was a majority of 11,000 given for the 
new constitution on the 7th of May last, and that there was an absolute 
protest against the introduction of Chinese into the State. 

Mr. Martin. Yon would first abrogate the Burlingame treaty, then 
you would fix immigrants on the uncultivated lands. But what would 
you have Congress do in regard to Chinese immigration? 

Mr. O'Brien. I would have Congress pass a bill whereby the number 
of Chinese immigrants would be limited. 

Mr. Martin. To what extent would you limit Chinese immigration $ 



DEPRESSION IN LABOR AND BUSINESS. 327 

Mr. O'Brien. I would limit it to ten or twelve or fifteen passengers 
on each ship. 

Mr. Martin. What would you do with the Chinese who are already 
here ? 

Mr. O'Brien. We would not interfere with them, but they would have 
the opportunity, if they desired it, of returning to their own country. 

Views of Mrs. Ralph. 

Mrs. Ralph appeared before the committee and asked leave to make 
a statement. 

The Chairman. What do you wish to say to the committee'? 

Mrs. Ralph. I have been here mwe 1861. I am a dressmaker by 
trade. 1 have lived most of that time in what is called Chinatown. I 
have known young girls to be driven away from the work which I could 
have given them, and I have known them frequently to be obliged to 
go on the town. Two doors from our house there was a large French 
boarding school, and that building is now, I believe, occupied by two 
hundred Chinamen, who are making underclothing of all kinds for Levy 
Straus. 

The Chairman. Are you still carrying on dressmaking there? 

Mrs. Ralph. Yes. sir. 

The Chairman. How many persons have you in your employment? 

Mrs. Ralph. I have at present four. 1 used to have from ten to 
twelve. 

The Chairman. Why were the females who had been in your employ- 
ment deprived of work with you ? 

Mrs. Ralph. We were once able to supply wrappers and plain work, 
but now that kind of work is done by the Chinese. One Chinaman here 
offered me $200 to teach him to cut dresses. 

The Chairman. Did you make a bargain with him % 

Mrs. Ralph. iSo, sir 5 I would not teach him for $500. I didn't wish 
to have anything to do with him. 

The Chairman. Then, in your judgment, this Chinese competition 
has driven females out of their honest employment"? 

Mrs. Ralph. Yes, sir ; and thousands. 1 have thirty-four relatives 
who want to come here from Canada, but I would not let them come on 
account of the Chinese. 

The Chairman. What are these young ladies doing now who had to 
leave their employment with you on account of Chinese labor % 

Mrs. Ralph. The last one that left me is living with her brother. 

The Chairman. Do you mean to say that these young ladies are not 
now able to get work ? 

Mrs. Ralph. They are not able to get anything to do. Of course they 
are not able to do the best work; they can only do plain work. We do 
not get that kind of work to do any more. Another objection is, that 
my customers refuse to come to Chinatown to be fitted. 

The Chairman. Then the location that you are occupying is an injury 
to your business? 

Mrs. Ralph. Very much, indeed. 

The Chairman. If you were living in any other part of the city would 
your former customers patronize you ? 

Mrs. Ralph. Most of my customers would. 

The Chairman. And then you could give employment to other girls % 

Mrs. Ralph. I think I could. 

The Chairman. Then there are two ways in which yon are injured 



328 DEPRESSION IN LABOR AND BUSINESS. 

by the Chinese: first by their competition, and second by their neigh 
borhood ? 
Mrs. Kaleh. Yes. 

Views of Mrs. E. Swift. 

Mrs. E. Swift came before the committee. 

The Chairman. What is yonr business? 

Mrs. Swift. I am in the real-estate business and in stock mining. 

The Chairman. Do ladies here deal in stock mining ? 

Mrs Swift. Occasionally they do. 

The Chairman. What have you to say to the committee ? 

Mrs. Swift. I came here more particularly to state the condition of 
a good many ladies who would like to be employed in many industries 
than I did to give my testimony, for I gave my testimony before Sena- 
tor Morton's committee, which was here two years ago. In regard to 
the Chinamen manufacturing at present, I would desire to say that they 
are manufacturing in the outskirts of the city, in garrets, where they can 
get cheap rents, and they send agents out with cards to ladies who wish 
to buy shoes or underwear. Six years ago a lady would have to pay $2.50 
for making a garment which she can now buy already made (material 
and all) for $1.50. Our merchants have to pay duties on their goods, 
and storage and license, but the Chinamen manufacture in garrets so 
that they can almost furnish the goods for the cost of the material. I 
would not be able to make the garment for the price for which they offer 
to sell it to me. The young women of the city now have no employ- 
ment, because, in the first place, Chinamen can do the work at a rate 
at which no white woman would earn her broad ; and in the second 
place a white woman would be apt to leave the job, hoping to get bet- 
ter work. If a Chinaman can make six bits a day he is satisfied. 

The Chairman. Is it customary for ladies here to deal in mining 
stocks ? 

Mrs. Swift. The wives of some of the wealthiest gentlemen here 
deal in stocks. 

The committee adjourned till to-morrow. 



San Francisco, August 19, 1871). 
Vieivs of Mr. John A. Collins. 

Mr. John A. Collins appeared befor.e the committee. He stated, in 
reply to preliminary questions, that he is a native of the State of Ver- 
mont ; is an attorney at law, and has been in the State of California 
about thirty years. 

Mr. Cowoill. The object of this investigation is to acquire such in- 
formation as we can obtain in regard to the cause of the present de- 
pression of labor and business throughout the country, and as to the 
remedy therefor. You may address yourself briefly to this subject. 

Mr. Collins. I think that the causes of the depression are very much 
the same in this country as in nearly all civilized countries. The forces 
of material production are immensely in excess of the capacity of the 
people to purchase. During the present century there has been grad- 
ually going on a revolution in regard to the industrial and distributive 



DEPRESSION IN LABOR AND BUSINESS. 329 

system of tbe country. When I was a boy farming was comparatively 
an independent business. Every well-regulated farm was the centre ot 
from five to twenty industries, which are now, by virtue of machinery, 
made specialties, and which give employment to an army of middle 
men. At that time, though wages were very low, and there was very 
little money in circulation, every one could get employment. Wages 
were from $5 to $10 a month, and from $6 to $7 a month, for the year 
round ; but there was very little distinction between a large farmer and 
a small one. About all the distinction that existed was, that the one 
would have a fanniug-mill instead of a hand-mill, and a cradle instead 
of a sickle. A poor man then could go on a farm and compete fairly 
and equally with the largest farmer. Men could get employment the 
year round. In winter they would thrash out their grain, shell their 
corn, break their flax, dress it, and get up their wood for the winter, 
log it to the mill, and do various kinds of work which employed them 
the entire year round. Hence there was no one idle. It is an old 
proverb that "An idle brain is tlie workshop of the Devil." The change 
now is thorough and complete. In this State, as in all other States, 
there is but little permanent employment. Outside of clerks and ser- 
vants, and of a few substantial men in the various manufactories, there 
is no employment the year round for any one. Our mines here, with the 
exception of the quartz mines, are exhausted. They are worked but a 
portion of the year. Our farmers give employment but two seasons in 
the year, so that men on farms cannot be employed more than three or 
four months successively, and the balance of the time they must look 
to other resources for means to live. They therefore rush to the cities. 
Laborers are idle. Whiskey shops and gambling places are the only 
places which furnish amusement for this class. Not that all unemployed 
men go there ; but that is the tendency. By this system we acquire a 
shiftlessness of character. That is the tendency of it. Many, in their 
efforts to live, will work on farms or in some other places till they get some 
money and think that they can go into business. They do go into busi- 
ness and fail, and they fail till in the constant failing they lose their 
self-confidence and self respect, and begin to feel that there is no place 
for them. A distinguished man of Boston, Abbott Lawrence, in a for- 
mer generation, kept an account for fifty years of the failures of busi- 
ness men in Boston, and he stated that ninety-seven out of every 
hundred who went into business failed. I think that if we were to make 
inquiries of those who keep a run of the business men of the country, 
at present, we should find that hardly 1 per cent, succeed in business. 
Many are constantly failing, and are forced on from one kind of business 
to another. There is a pressure going on all the time, through the in- 
fluence of mechanical inventions which are designed, and will be ulti- 
mately brought into use, for the benefit of the whole, but which are 
really now made to oppress the people. These inventions are so numer- 
ous that they have glutted the market with products. I presume it is 
safe to say that there are very few manufacturers in this city who could 
not double their products every year, and many of them quadruple and 
quintuple them, if they had the market. But not having the market 
they cannot run their machinery to its full power, and cannot give em- 
ployment to all the men whom they would be glad to employ. The 
committee is well aware that it costs more to sell goods than it costs to 
make them. I am paying myself everyday two, three, and four times more 
for tilings which 1 consume than the original producer realized for them. 
This stateof things, this immense productive capacity (augmenting all the 
time), has forced a very large class of the less energetic, and the more in- 



330 DEPRESSION IN LABOR AND BUSINESS. 

dependent (partly from a sense of mauhood and partly from a sense of 
degradation), into idleness, partial employment, want of employment, 
pauperism, crime, and into becoming tramps. I do not know any one 
who has the exact figures ; but the number of people who are right on 
the border, or within a few degrees of the border line of absolute want, 
is estimated all the way from a million and a half to three millions. No 
one can give them employment if they would. Many of them have ac- 
quired such habits that probably they could not be good employes 
though they had the desire. Our country has been ou the eve of bank- 
ruptcy again and again. Everybody knows that the war of the rebellion 
gave to the country a degree of prosperity which it had never attained 
before, because the government became an employer, became the market, 
was the market consuming products at the rate of $2,000,000, $3,000,000, 
$4,000,000 to $5,000,000 a day. There were a million of men in the 
Army; aud their attendants were receiving high wages. This stimu- 
lated everything, and the country had never been so prosperous. After 
the war it took five, six, seven years to supply the waste, to fill up the 
store-houses, to clothe the shelves, and to place us in the position in 
which we were before the war. Then came inability to find a market. 
Machinery was kept running: men were kept in employment; wages 
were high, and before we were aware of it there was a dearth ; there 
was want ; there was no market. Capitalists began to be suspicious. 
They drew in their money, and in 1873 we had the troubled condition 
from which we have not recovered. The only mode of recovery was to 
diminish expenditures ; but that, as a matter of course, was a great ob- 
stacle to the progress of the producing and distributing classes. Man 
is the most helpless of all beings. He is more dependent on his fellows 
than any being that lives; and every new piece of machinery that is 
invented helps to augment that helplessness, and to make him more and 
more dependent. In my boyhood a man was comparatively independ- 
ent. His wants were few and the means of supplying them were almost 
within himself. But every machine that is introduced makes man more 
and more helpless. There are eighteen departments in the manufacturing 
of a pin, and one hundred and three departments in the manufacture of a 
needle ; and the man who works in one of these departments all his life is 
fit for nothing else. Men are forced into one of these departments and 
are dependent on that work for their living and for the support of their 
families ; and any shock that suspends the operations of that depart- 
ment throws these men Out of employment. They are not competent 
for any other position, if there was any other open to them; but there 
is no other open to them. Hence, to the introduction of labor-saving 
machinery, to the excess of production over the capacity of the people 
to buy, I attribute the paramount cause of our hard times. There are 
a hundred subsidiary causes which come in and play a part; but the 
use of machinery is the great and paramount cause. Not that I would 
displace machinery. Machinery is mau's friend, and when it has an 
opportunity, like capital, it will wipe sweat from his face, soften his 
palm, and remove from his shoulders the great burdens that are on him 
now. Capital is no enemy to labor. I am unable to see any irrepressi- 
ble conflict between capital and labor, any more than between capital 
and machinery, capital and skill, capital and enterprise. If there is any 
conflict, it is in the relation of employer and employed, where their in- 
terests ,are antagonistic, and which has produced what is called cut- 
throat competition, by which a few are able, by virtue of their superior 
qualities, by virtue of their greater endurance, by virtue of their com- 
bination of capital, skill, and wealth, to overcome the weak and to make 



DEPRESSION IN LABOR AND BUSINESS. 661 

the weak subordinate to their wishes and desires. If there is any con- 
flict at all, it is between employer and employed. The one wants to get 
the greatest amount of work and the greatest profit from his invest mcnt, 
and the other wants to get the greatest amount of pay for the least 
amount of work, Man, individually and alone, is very dependent, 
and under our competitive system, by which the few can absorb and 
have absorbed the mass of the wealth of the country to themselves, 
the average man is iucompetent, single-handed and alone, either in agri- 
culture or manufactures, to keep up a fair competition with capita], 
skill, and labor. Nature has established one great principle which domi- 
nates the entire universe, so lar as I have beeu able to learn, and that is 
co-operation. The air which we breathe is co-operative. The food that 
we eat, the clothes that we wear, every great enterprise that is charac- 
terized by great results, has been the product of co-operation ; and under 
the invention of labor-saving machines, all classes, the wise, the moneyed, 
the capitalist class, have been able to avail themselves of this principle 
of co-operation to carry out the great results which they have achieved, 
while the laboring man, the poor man, has been the only being who has 
been made subservient to their ends. He has been unable to cooperate. 
The idea is that, as the Government of the United States, like all govern- 
ments, has encouraged the 'sj stem of individual aggrandizement, of 
wealth in land, and in other modes, the material forces of the nation are 
all pledged to defend the owners in the possession of the large estates 
which they have acquired. I make no objection to that. For instance, 
a man owns a thousand lots in this city, and there are 300,000 people who 
do not own a single lot. There are men in this State who own 800,000 
acres of land, and there are 550,000 people in this State who do not own 
a foot of land. If any one of them should go on any of those lots or 
unoccupied lands and say, u Here I will build me a home," the moral 
and material forces of every organization of the government are pledged 
to defend the owner in the possession of his property, at the expense of 
the lives of the whole community. I do not complain of that; but I 
would say that the government having encouraged this state of things, 
it is now its duty to place the surplus population of the country on 
lands, to devise ways and means and to mature plans by which that can 
be carried out successfully. 

Mr. Martin. How would you bring this about ? By Congressional 
legislation I 

Mr. Collins. By means of government loans. (I think th-e chairman 
knows what I mean.) By means of government loans the people might 
be located on farming lands. By dividing the country up into districts 
and appointing a superintendent over each district. 

The Chairman. You mean where the government owns the land ? 

Mr. Collins. No, sir. 

The Chairman. Do you propose to divide up all the land whether 
owned by the government or individuals '? 

Mr. Collins. Yes, sir. I would not send our population of California 
to Kamtschatka or any cold northern State while we had laud enough in 
this State to support in luxurious abundance every man, woman, and 
child in the United States. We shall apply to the legislature at its 
next session for a bill authorizing us to do that. 

The Chairman. How would you divest owners of land of their titles ? 

Mr. Collins. We shall apply to the legislature next winter asking it 
to grant to the Federal Government the right of eminent domain in Cal- 
ifornia for co-operative purposes, by which the district superintendents 
can condemn the land and pay for it. 



332 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Martin. Against the consent of the owners? 

Mr. Collins. By the right of eminent domain. 

The Chairman, Your idea is to take back the title from the owners, 
and then redistribute the land ? 

Mr. Collins. No, sir. For instance, if a co-operative association re- 
quires 40.000 acres of land and makes application to the district super- 
intendent, locating the place where it wishes to go, and demonstrates 
to his satisfaction (he being under the control of the Federal Govern- 
ment) that it has ability and disposition to perform the labor and to 
organize a co-operative homestead institution, the superintendent would 
be authorized to make the assignment, just as land is condemned for 
railroad purposes and for public buildings. He would appoint a com- 
missioner to ascertain its value and pay for it. 

The Chairman. Whether the owner consented or not? 

Mr. Collins. Of course. 

Mr. Cowoill. That is on the principle that the public has an interest 
which is paramount to every other interest? 

Mr. Collins. Yes, sir. 

The Chairman. In my bill I did not propose to take the title frsm in- 
dividuals. It applied only to lands of which the government is the 
owner, 

Mr. Collins. Our purpose is to get for the Government of the United 
States the right of eminent domain in this State. 

Mr. Martin. And you would apply this principle to all the other 
States ? 

Mr. Collins. Yes, to every State of the Union. And we propose a 
distinct amendment to the Constitution, grauting the right of eminent 
domain to the General Government for co-operative homestead purposes . 
We have presented this plan to a large number of capitalists and busi- 
ness men, and they have given it their written indorsement, as being a 
bridge to span over this chasm ; as being the means to preserve the 
couutry from another outbreak like the Pittsburgh riots, because every 
year augments the numbers of the non-producing and non-employed 
classes. 

Mr. Martin. Do you own any land yourself? 

Mr. Collins. Yes, I own a little land. I have been the owner of a 
good deal of land. I am now speaking on principles of the broadest 
political economy, principles which should challenge the best view of 
every philanthropical and well-meaning man in the community. This 
is a system which enables the Government of the United States to take 
withiu its embrace all the distracted and disturbed elements of the 
country and bring them into harmony with its own purpose, and thus 
preserve the nation from that conflict which is agitating the public 
mind today and endangering the institutions of the country. 

The Chairman. Would you give the Chinese the benefit of this co- 
operative homestead system? 

Mr. Collins. I think that that is covered here in this printed pamph- 
let (reading) : " Every person " 

The Chairman (interrupting). Every Christian person. 

Mr. Collins. No, sir. Every citizen of the United States, or who has 
made his application to become a citizen of the United States. 

The Chairman. You do not pretend that that would take in the 
Chinese? 

Mr. Collins. No, sir; except the Government of the United States 
makes the Chinaman a citizen. 

The Chairman. The Chinaman will not become a citizen. 



DEPRESSION IN LABOR AND BUSINESS 333 

Mr. Collins. Then lie cannot become a member of the co-operative 
system. The object of this system is to place the entire surplus popu- 
lation of the country on land not simply for agriculture, but for the 
purpose of diversified industries. The Government of the United States, 
like all the governments of the world, has adopted commerce as the 
great power increasing national wealth. 

The Chairman. Give us your application of the general principles of 
your system. 

Mr. Collins. The whole principle of it is embodied in the gospel com- 
mand, " Thou shalt love thy neighbor as thyself," and in the doctrine of 
the Declaration of Independence, that "all men have an inalienable right 
to life, liberty, and the pursuit of happiness." 

The Chairman. There is also a command to man that he shall not 
worship graven images. 

Mr. Collins. I have no objection to that command. As I was say- 
ing, the whole principle of political economy and the rights of man are 
embraced in that doctrine of the Declaration of Independence, that all 
men have a natural and inalienable right to life, liberty, and the pursuit 
of happiness. The whole country is talking all the time about that, 
and the church has been talking for eighteen hundred years about the 
sermon on the mount ; and yet you want me now to condense a new 
thought into five minutes. The idea is to give homes to the homeless, 
to place men in a condition by which they can take care of themselves. 
It is cheaper to qualify man to feed himself than it is to feed him as a 
pauper. It is more humane to prevent crime than to punish the crimi- 
nal. We propose, therefore, that the Government of the United States 
shall take not only the unemployed and the surplus population of white 
men, but the freedmen of the South and the Indians, and place them 
on the lands. They only want direction. They want some one to over- 
look, to devise ways and means, and to direct them, so that they may be 
able to use their own forces for their own advantage. We propose a co- 
operative homestead system. It will take, perhaps, six or eight years 
to get one homestead in perfect operation, although others of them may 
be in process of establishment all the time. We propose that no man 
shall be placed on a farm until there is a house for him to live in, food 
for him to eat, and a specific thing for him to do. The trustees of the 
association shall know precisely how the man is going to be employed, 
the house that he is to live in, and the work that he is to do. 

Mr. Martin. Is the government to supply him with food also ? 

Mr. Collins. No, sir. We propose that when fifty persons, eligible 
for membership, shall forward to the district superintendent their peti- 
tion for authority to organize a co-operative homestead association, the 
district superintendent shall forthwith give the same due consideration, 
and shall proceed in the work of preparation, the transportation of the 
families, the organization of the association, and putting the same in 
working order. 

The Chairman. Do you propose to pay the trustees for their 
services ? 

Mr. Collins. No, sir. I propose that the government shall loan or 
assign, for the benefit of every member who holds a share of stock, the 
sum of $500 for the purpose of locating the members of the association 
on land, putting up public and private buildings, fencing the land, and 
for agricultural and other implements, seeds, and for food, until the mem- 
bers are able to carry on the work themselves. 

The Chairman. At what rate of interest do you propose that the 
money shall be given ? 



334 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Collins. The plan provides that the government shall issue bonds, 
probably at 4 per cent. 

The Chairman. You had better say 3 per cent. 

Mr. Collins. That would be one-fourth better. I am willing that the 
interest shall be reduced to 2 per cent, or 1 per cent., and I hope that 
my graudchildreu shall see the time when interest shall be reduced to 
nothing. I propose that the Government of the United States shall ap- 
point a majority of the trustees, and that the association shall appoint the 
minority ; that is, that the government shall appoint one more than one- 
half the number. Asa matter of course, that will keep the whole thing 
within the reach of the government till the last dollar of the debt is 
paid. The plan provides that at the end of three years the investments 
made by the government shall be added up, and that from that time 
interest shall be paid on the money, and that at the end of five years 4 
per cent, a year shall be paid on the investment till finally the whole 
debt is discharged and the government releases its claim. That would 
take twenty-five years. 

Mr. Cowgill. Your object is to create a sinking fund by ^ tax on the 
association, so as to extinguish the principal % 

Mr. Collins. Yes, sir. 

Mr. O'Connor. You suggest legislation by Congress creating a co- 
operative homestead association. That is your view of the remedy % 

Mr. Collins. Yes, sir. 

Mr. O'Connor. State to the committee what effect the Chinese immi- 
gration has had on labor in California and on the Pacific coast, particu- 
larly in San Francisco % 

Mr. Collins. I think that the influence has been very mixed. 

Mr. O'Connor. Has it been adverse % 

Mr. Collins. It has been both adverse and beneficial. It has been 
beneficial in this sense, that it has enabled us to start certain industries 
which could not exist here if we had not cheap labor. If the Chinese 
should be turned out of the country, I think that, for the time being, we 
would suffer very much. 

Mr. O'Connor. Would not the vacuum be immediately filled up by 
other labor? 

Mr. Collins. The numbers might be filled, but I do not think the 
American people would condescend to work for the wages that the 
Chinese work for, and I do not want to see them do it either. I do not 
want to see American citizens reduced to that. We have higher prices 
now than are paid in any other part of the world. 

Mr. O'Connor. But these high prices are not paid to the Chinese % 

Mr. Collins. I think that the wages paid to the Chinese here are 
higher than the wages in England, France, or Germany. 

Mr. O'Connor. Are they as high as are paid for similar labor in the 
East \ 

Mr. Collins. They are in some instances, but I think that they are 
not as a general rule. It is not probable, in the nature of the case, that 
60,000 or 70,000 adults could be thrown into a State with a voting popu- 
lation of only 140,000 without injury to the people who belong to the 
country. It must necessarily work injury. It has had that tendency, 
and must continue to have that tendency. The Chinese get all the pay 
that they can get for their work; but they will bid a little lower than the 
white man. I think that there is a good deal of labor that the Chinese 
perform and that the white man will not perform ; for instance, in har- 
vesting operation. There is the work of binding, which the white man 
does not like to do. The Chinese will bind by nights, and will do that 



DEPRESSION IN LABOE AND BUSINESS 66b 

kind of work which white men do not like to do. It is the same in our 
mines. Chinese have taken and worked mines which the white men have 
abandoned, and they have taken a vast amount of money out of them, 
and have given employment to a large number of distributors of wealth. 

The Chairman. Do you believe that it is compatible with the inter- 
ests of this city and of this State to have the Chinese element maintain- 
ing and occupying the position which it does now I 

Mr. Collins. I think that any population that cannot assimilate with 
the people of the country is an undesirable population 

The Chairman. Do you think that the two populations can exist with- 
out strife and bloodshed ? 

Mr. Collins. I do not know. I have lived here through one series of 
proscriptions. 

The Chairman. You have survived the vigilance committee? 

Mr. Collins. Tes : I have survived that. 

The Chairman. But here is another element of danger. Here are 
33,000 Chinese in the center of this city. Can this become a prosperous 
city and maintain its character and reputation as a Christian community 
with these people in the midst of it? 

Mr. Collins. I do not think that 30,000 pagans would add much to 
the Christian element of the community. 

The Chairman. Is their presence to be tolerated J ? 

Mr. Collins. It is a very mixed question. 

The Chairman. Can a Christian community like this city tolerate 
30,000 pagans iu its midst ! 

Mr. Collins. Our Federal Government is constructed on the princi- 
ple of toleration. 

The Chairman. But can this city tolerate it I 

Mr. Collins. If it is the principle of the Federal Government, a city 
within the jurisdiction of that government ought certainly to conform to 
that principle. 

The Chairman. You think that it is the duty of the government to 
maintain peace between Christians and pagans when they stand in the 
position that they do here ! 

Mr. Collins. The principle of our government is to recognize no re- 
ligion whatever. The principle of our government is toleration to men 
of all faiths and all religions. 

The Chairman. Do you call paganism a religion ? 

Mr. Collins. Most decidedly I do. 

The Chairman. I thought that religion involved the idea of a God % 

Mr. Collins. Do you not recollect what St. Paul said to the Athen- 
ians, " Ye men of Athens, I perceive that in all things ye are too super- 
stitious." I think the Chinese a very religious people. I see them 
going to their cemeteries, bringing out meats and drinks to help the 
poor devils to set through purgatory. 

The Chairman. Do they get them safely through ? 

Mr. Collins. That is a case of quien sabe. I do not know. 

Mr. Dickey. Should the Federal Government allow the law permit- 
ting immigration of Chinese to exist, or should the law be changed ? 

Mr. Collins. It seems desirable that the Chinese immigration should 
be discouraged by all honorable means. 

Mr. O'Connor. And by constitutional legislation. 

Mr. Collins. By all honorable means, constitutional or otherwise. 
Still I cannot see how we can well dispense with the Chinese, because 
cheap labor is a great desideratum. A market is what the civilized 



336 DEPRESSION IN LABOR AND BUSINESS. 

world wants, and we cannot have a market unless we can undersell 
somebody else. 

The Chatrman. Do you approve of the motto on our coin, " In God 
we trust V 

Mr. Collins. Certainly I do. The government has seen fit to put it 
there, and the coin is as well with it as without it. 

Mr. Chairman. Do you suppose that these Chinese have any idea 
at all of a God ! 

Mr. Collins. I think that if the chairman of this committee would 
sift the sentiment of the American people he would find more atheism 
among them than among the Chinese. 

The Chairman. Do you think that the Chinese have any idea of the 
God mentioned on our coins? 

Mr. Collins. They cannot read the motto. If it was in Chinese they 
could read it. 

The Chairman. Do you suppose they have any notions of a God % 

Mr. Collins. I am sure they have. 

The Chairman. Is their god like an alligator, the figure of which 
they have here in their temple, with four feet, eyes bigger than your fist, 
a red mouth and red tongue? 

Mr. Collins. If I was to go into a discussion of their religion, it would 
take so long that the committee would call me to order; but I think 
that I could give you a rationale of the matter very easily, consistently 
with the idea that the Chinese believe in a God. 

The Chairman. Do they believe in our God ? 

Mr. Collins. They believe in the Great Supreme Being who controls 
the universe. 

The Chairman. So they believe that the Supreme Being is concentrated 
in an alligator. 

Mr. Collins. Every nation has its peculiarities and has its reasons 
for them. If I should enter into an analysis of the psychological forces 
that have contributed to those peculiarities, I am inclined to think that 
you would be impatient, and say that you could not afford the time. 

The Chairman. You know that when St. Paul went to Athens he 
saw a church erected a To the unknown God," and said, " Whom there- 
fore ye ignorantly worship, him declare I unto you." 

Mr. Collins. Precisely so. 

The Chairman. Suppose St. Paul had found an alligator there, woul 
he have made that remark ? 

Mr. Collins. Most decidedly he might have. 

Views of John Richard Freud. 

John Richard Freud appeared before the committee. He stated, in 
reply to preliminary questions : I am a native of the State of New York. 
I am twenty-two years of age. I am a merchant, engaged in the manu- 
facture and importation and sale of ladies' and children's wear — princi- 
pally corsets, underwear, cloaks, &c. Our establishment is one of the 
largest of its kind in the city. It is the firm of W. Freud & Sons, con- 
sisting of my father, brother, and myself. I have resided iu this city 
about seventeen years. 

The Chairman. State the effect of Chinese labor on your business. 

Mr. Freud. There is no need of speaking of the moral and social ef- 
fects of the Chinese problem ; as to the economical effects of it, they will 
staud a good deal of argument, and thev need a good deal more inves- 
tigation and. thought. You have been made aware, no doubt, of the 



DEPRESSION IN LABOR AND BUSINESS. 337 

drain that these Chinese make on the resources of the State. Admit- 
ting that there are 150,000 Chiuese on the Pacific coast, and admitting 
that each earns a dollar a day (which is not an exaggeration), and ad- 
mitting that one-third of that amount is turned back to the industries 
of the. State (by way of China), you have still going out of this State 
to China $100,000 a day ; $3,000,000 a month ; $40,000,000 a year. This 
estimate accords with the testimony heretofore adduced before this com- 
mittee on that point. T have calculated the amount of money thus 
sponged up from the life-blood of the State through the horde of Chi- 
nese. I have taken the figures submitted to the Senatorial committee 
of 1876 as to the number of Chinese that have come here during the last 
thirty years, since 1849. I have taken the small figure of $1 a day as 
their average earnings, and I find that the net amount of money paid 
to the.se Chinese during the last thirty years reaches the incalculable 
sum of $600,000,000. Now, admitting that one-third of that amount is 
expended in 'this State (which is a great exaggeration), you have still 
$400,000,000 (one-fifth of the total debt of the United States) for- 
ever sucked out of the country and deposited in the stagnant coffers of 
the Chinese empire. 

The assessed value of real estate in this State exceeds $600,000,000. 
The Chinese, although constituting one-fifth of the population, do not 
own $1,500,000 of that amount, and they therefore pay less than a four- 
hundredth part of the revenue required to support the government of 
the State. They do not actually pay sufficient tax to support their 
Chinese criminals in the State-prison ; because, out of 550 in the State- 
prison, over 200 are Chinese. The actual cost of supporting these 200 
Chinese convicts exceeds by $12,000 per annum the entire amount of 
revenue collected by the State from all the Chinese in California. Every 
non-investing, non-consuming Mongolian in California shuts out at 
least one Caucasian family of five persons; and so the presence of 
100,000 Chinese in California shuts out one-half million of white persons. 
Then, bear in mind that whereas every Caucasian immigrant not only 
spends his earnings in the city, but brings a little -fortune (averaging 
$100) iu his pocket, the Mongolian not only ships his earnings out of 
the State, but comes here a stark-naked pauper. So you can see how 
this Chinese immigration has dwarfed and impaired the prosperity of 
the State. I see that in the Eastern States trade is reviving, where- 
as in this State we are going backwards. There is the cause of the bard 
times iu California. Five years ago our firm manufactured and im- 
ported ladies' and children's underwear to a large extent. We were one 
of the largest firms in this business in the State, I believe. We paid 
out at that time from $500 a month up sometimes to as high as $1,000 
to white girls for the manufacture of ladies' and children's underwear. 
To-day the Chinese have encroached on that trade. They have taken 
the business out of the hands of the white people, until to-day we not 
alone cannot manufacture and compete with the Chinese, but we can- 
not actually import from the Eastern market and compete with them. 
So that Chinese immigration notouly affects the people of this coast, but 
it affects the industries of the Eastern States; and there can be no 
doubt that the stagnation in the Eastern States is, in a very great meas- 
ure, due to the presence of Chinese on the Pacific coast. These Chinese 
manufacture boots and shoes and ladies' and children's underwear in 
large quantities, and they throw the products on the California markets. 
They go from house to house and peddle their goods until all the white 
girls and young men who have been in the business have been driven 
out of it; and you can surmise what has become of them. The voung 
H. Mis. 5 22 



338 DEPRESSION IN LABOR AND BUSINESS. 

women are driven to prostitution, and tbe young men are driven to 
crime. Many youug men with whom, at one tima, I played and associ- 
ated are to-day criminals. 

Mr. Martin. What is your remedy % 

Mr. Freud. I do not think that the Burlingame treaty ought to have 
anythiug to do with' the action of Congress on the subject. Personally, 
I uphold the sovereignty of the State of California, and its full power 
to deal with that question. In the last constitutional convention I in- 
troduced several sections to that effect. I believe that the State of Cal- 
ifornia has the power, and, if Congress does not offer us a remedy, we will 
exercise that power in order to get rid of the Chinese. Every State in 
the Union ought to have power to perpetuate its own existence. I think 
that the Supreme Court of the United States, in every instance, has up- 
held the right of each State to protect itself against any and all attacks 
on its welfare, and even Judge Field has stated in his last queue decis- 
ion that the State of California has the right to protect itself against 
any element that endangers its safety. 

Mr. Martin. Would you have Congress pass any law on the subject? 

Mr. Freud. 1 would, for the reason that I am fearful that if the State 
of California takes action on this question, its action may lead to a conflict 
with the national government. But if Congress does not take action, 
then I think I shall live to see the day when the State of California will 
do so. 

The Chairman. You look upon the evil as the citizens of this city 
did when they took into their hands the power of a vigilance committee 
as an element of self-defense. 

Mr. Freud. That is it. It is a matter of self-preservation. I do not 
think that the Supreme Court of the United States, in an emergency of 
this kind, would overrule the action of California iu the premises. 

The Chairman. You would resort to State action only as an extreme 
measure? 

Mr. Freud. Yes. 

Views of Rev. Otis Gibson. 

Eev. Otis Gibson came before the committee. He stated, in reply to 
preliminary questions: I have resided in this city since 1868. I am a 
clergyman — a missionary to the Chinese in this State. I am a member 
of the Methodist Episcopal Church and conference. 1 was ten years a 
missionary in China, and was then transferred here, and have been here 
since 1868. Since 1855 (with the exception of an interregnum of three 
years) my work has been among the Chinese. 

Mr. Cowgtll. Do you think that there is a depression of business, 
and labor in this State"? If so, state what effect the presence of Chinese 
has had in the way of producing that depression. 

Mr. Gibson. Up to the present, as a general proposition, I think that 
the presence of the Chinese in this city and State has only stimulated 
and benefited the industries of California. There is no doubt of it. As 
has been already said here, there are many industries, employing large 
numbers of people, which could not have been carried op here without 
the presence of the Chinese; and even in the industries where the 
Chinese do compete and do possibly make some frictio j with the whites, 
even there they do not yet compete with the Eastern manufacturers. 
Last year, in the month of September alone, in the matter of boots and 
shoes, in which the Chinese compete with white labor, the freight bill 
for boots and shoes introduced from the East and sold here was $10,000. 



DEPRESSION IN LABOR AND BUSINESS. 339 

That will indicate to you that the Chinese labor has not yet got down 
to compete with the Eastern manufacturers. The Chinese who are 
working on farms all through the country, so far as I can learn, get 
from $18 to $25 a mouth — $30, findiug themselves. Chinese servants 
working in families (according to their age and ability to work) command 
$8, $10, $20, $25 a month. American girls can hud house-work, if they 
will do it, and get $20 to $25, and found. I had occasion in Oakland 
two weeks ago to hire a man to paint. He was a man reduced to pov- 
erty and starvation, as I was told by the carpenters who recommended 
him to me, and he had a wife and children. I asked the carpenters how 
much he would charge a day, and they said $2.50. I told them to bring 
him on. They went to get him. and he asked what the work was. He 
was told that the building on which he was to be employed was to be 
used as a Chinese school, and he would not take the job on that account. 
If this is a question of hard times, then, so far as the products of the 
country are concerned, there are no hard times in California. The fields 
are loaded with grain ; the orchards with fruit. The climate is good. 
There is no pestilence; no epidemic, except whisky, and that prevails 
largely. The whisky-sellers of this city to-day ruin ten men where 
the competition of the Chinese ruins one. It is not the Chinese who 
do the evil; it is laziness and liquor, and unwilliuguess to work for 
low wages. The change from the high prices of things when the 
currency was all inflated down to the present gold value is very 
great. The man who was a few years ago worth $3,000 in currency 
finds himself now worth $1,000. Men who got $5 a day when the cur- 
rency was inflated get only $2 and $1.50 a day now, and if men would 
only work for the wages that I worked for on a farm when a boy, they 
could get work anywhere in the State. Tne reason that they cannot 
get the work is because they will not go on farms. When my father 
went on a farm his children did not expect him to support them in 
laziness and to keep them in beer, tobacco, and whisky. Everybody 
had to work : my mother worked, and my sisters worked, and we got a liv- 
ing, and did not ask any odds from anybody. We were not afraid of 
Chinese or any other competition. If this committee will call before it 
men who are employing Chinese all over the State, and if the com- 
mittee will compare the prices of labor paid to the Chinese with the 
prices paid in the Eastern States, it will fiud that the 50,000 Chinese in 
this State to-day (unskilled laborers) receive more wages than the same 
class of laborers in the Eastern States. If we are to keep up the high 
prices of labor in this State, we can never compete with the East, and 
we never can have successful industries in the State. We must have cheap 
labor if we are to compete with the East and with the immigrants from 
Europe, who work for much less wages thau the immigrants from Asia. 

Mr. Dickey. A number of gentlemen have testified before the com- 
mittee to the effect that the Chinaman always puts his price for working 
a little below what the white man asks. Were all these men mistaken 
in their statement ? 

Mr. Gibson. I do not know about individual cases. Chinese are 
ready for competition the same as other men. 

Mr. Dickey. Is it true or not true that the Chinaman will always put 
the price of his work a little lower than the white man will ask? 

Mr. Gibson. I do not think it is true. It may be that they do it in 
some instances, especially in the case of house-servants, bat I kuow of 
inauy instances where Chinese bj.ys would not hire as servants because 
they could not get the wages that they demanded. 



340 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Dickey. Can you tell us whether the Chinese who are imported 
here are under contract to work for a specified time? 

Mr. Gibson. I know of no such system in the importation of Chinese 
except in the case of women. 

Mr. Dickey. Do you knoAV of the six Chinese companies ? 

Mr, Gibson. There are six different companies, or perhaps seven, that 
are commonly known as the " six Chinese companies." I know some- 
thing about them. 

Mr. Dickey. What is their business ? 

Mr. Gibson. These companies are a kind of Chinese beneficial, and 
mutual aid society. 

Mr. Dickey. State the manner of their business, and what their busi- 
ness is. 

Mr. Gibson. It is the custom among the Chinese, when they go from 
their own place to another city (even in China) to transact business, that 
the persons who come from the one district gather themselves together 
and form an association for mutual advice, mutual information, and mu- 
tual aid, in case of necessity. Any person coming from that district who 
gets embarrassed would bring his case before the council or company 
(they call it company), and would receive help according to the circum- 
stances of the case. Each of these companies here elects one man who 
is called the president of the company, and another is elected as inter- 
preter, because, many times, the president cannot speak a word of Eng- 
lish. They find this system more important here than they do in their 
own country. You see at once that they would evidently beNSurrounded 
by difficult circumstances. That is the primary object of these com- 
panies. That there is speculation and dishonesty occasionally in the 
operations of these companies, I presume is the case as it is with other 
associations. 

Mr. Dickey. Is it true that the Chinese who come here are under 
contract to these companies to pay for their transportation, &c. 

Mr. Gibson, iso, sir. It has been testified sufficiently to satisfy any- 
body that the six companies, as such, have never transported Chinese 
to this country. It is a travesty on what ought to be known all over 
the land for any one to suppose that the Chinese six companies have 
imported men as such. 1 have no interest in defending the Chinese six 
companies. I have no interest in them only for the sake of the truth. 
In fact, I do not myself believe in the six companies; I do not believe 
that, on the whole, they are a good thing for the Chinaman, but, at the 
same time, I understand that their intentions and habits are for mutual 
assistance and protection. They are a something between an insurance 
society and the order of Odd Fellows. 

Mr/DiCKEY. Do you know whether or not the six Chinese companies 
here have agents whose duty it is to go out among employers of China- 
men here and to collect the money of the Chinaman % 

Mr. Gibson. No, sir; I do not know anything of the kind, and I do 
not believe in anything of the kind. There may be some women brought 
here against their will (and that is a very bad system), but, so far as 
men are concerned, I do not believe that a man of them comes to Amer- 
ica except by his own free choice, unless it be some boys who are sent 
by their fathers. 

Mr. Dickey. But does not the Chinaman enter into some contractor 
agreement with the owner or agent of the ship that he will labor here 
a certain specified time for certain wages, for the purpose of paying his 
transportation ? 

Mr. Gibson. I do not think that any contract of that kind exists. I 



DEPRESSION IN LABOR AND BUSINESS. 341 

think that these Ohiuaraen borrow money at home from their fathers, 
tli^ir uncles, their brothers, their cousins, and all of their family name. 
They are the most wonderful people in the world for borrowing from 
their relations. A member of the Chay family may be a fourth or fifth, 
cousin of another member of that family; but, in common talk, he is a 
brother, because he is a Chay j and the poor Chay will go to the rich 
Chay, and will tell him that he wants to go to California, and that he 
wants to have his passage paid. The rich Chay agrees to advance the 
poor Chay so much money; and the poor Chay comes here and works, 
and pays it as soon as he can. There can be no objection to that, so far 
as I can understand, as it is a mere matter of borrowing money and re- 
paying it. 

Mr. Dickey. Then all these stories about Chinamen being imported 
here, and about their being under contract to work and to pay money 
to these six companies, are, you say, untrue \ 

Mr. Gibson. I do not believe that they are true, and I believe that a 
great many of the newspapers that publish these statements do so know- 
ing that they are publishing what is not true. 

Mr. Dickey. Do the Chinese people in California have any separate 
organization among themselves for their own individual government, 
independent of the laws of the State ? 

Mr. Gibson. Xo, sir ; not that I know of. 

Mr. Dickey. Have they any secret organization among themseLves ? 

Mr. Gibson I presume that they have secret societies like the Masonic 
society. I do not know what they are. 

Mr. Dickey. Do you know whether they have secret organizations! 

Mr. Gibson. I say that I think they have. 

Mr. Dickey. Do you know the object and character of any of them ? 

Mr. Gibson. There are one or two associations of men, called " Life- 
protecting societies," which means that they protect the Chinese owners 
of prostitutes. If the woman runs away they will bring her back for a 
certain amount of money, or they will do some violence to her. There 
is a class of bad Chinamen here who have joined themselves together 
in this way, forming societies to protect gambling and prostitution, but 
that has nothing to do with the six companies. 

Mr. Dickey. Do the Chiuese women who are imported here come 
through some of the six companies ? 

Mr. Gibson. No, sir. 

Mr. Dickey. The men who are engaged in that business buy these 
women in China? 

Mr. Gibson. Yes. 

Mr. Dickey. Do they not come here through one of the six com- 
panies % 

Mr. Gibson. No, sir. 

Mr. Dickey. You think the six companies do not import them 1 

Mr. Gibson. I think they never have done so. It is not within the 
province of the six companies to do anything of the kind. It is out of 
their lin<±. I do not know but that there may be men who import Chi- 
nese women here. Nearly all the names of the Chinamen here are on 
the books of these companies. I have no evasion to make, and no case 
to make for the Chinamen or against them. 

Mr. Dickey. You say that the names of all the Chinamen can be 
found on the books of the six companies ? 

Mr. Gibson. Most of them are there. 

Mr. Dickey. What is the object of having the names on the books 
of the companies ? 



342 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Gibson. As I told you before, all the Chinamen coming from a 
certain place congregate together for mutual protection. For instance, 
a Chinaman named Yung Wung comes to San Francisco. He conies 
from the place in China where all the Yung Wung people who are here 
come from ; and they have a society here, a company, and he goes there 
and registers his name. Or, if he does not, one of the interpreters 
meets him on the steamer and finds out from what part of China he is, 
and tells him to which company he belongs; and so they adjust them- 
selves in that way. That is done through these six companies. 

Mr. Dickey. Have the Chinamen any arrangement by which their 
remains, after death, are sent back to China? 

Mr. Gibson. The Chinaman is very much like other people in that 
matter, perhaps a little more so. They are very fond of having their 
dead buried in their own land. They have a superstition that some 
places are better than others. They think their own land better than 
any other land, and some parts of their own land better than other 
parts, and fathers and mothers want their sons' bodies carried home to 
be buried at home. 

Mr. Dickey. Are the bodies of all the Chinamen who die here sent 
back ? 

Mr. Gibson. No, sir. We in California find their bones very useful. 
Although we are not willing to have the living Chinamen here, we are 
very anxious to keep the dead ones. 

Mr. Dickey. Please explain what you mean by wanting to keep dead 
Chinamen here. 

Mr. Gibson. We have legislation here under which a Chinaman can- 
not take up his dead and send him home without a large expense. He 
must get a certain kind of coffin. He must pay certain taxes. He must 
wait some months or years after the dead are buried, and every kind of 
objection and trouble is put in his way, until the Chinamen have be- 
come quite civilized in regard to the matter, and think they had better 
keep their dead here. This law was made for the express purpose that 
Chinamen should not be permitted to carry home their dead. 

Mr. O'Connor. There is no absolute prohibition ? 

Mr. Gibson. No, sir; only the burden of expense is made so heavy 
that it is almost impossible, and it is seldom done now. 

Mr. O'Connor. Is not that a sanitary law that you refer to ? 

Mr. Gibson. I suppose it is. It may be that our law- makers thought 
that the dead Chinaman is healthy, and the living Chinaman unhealthy. 

Mr. O'Connor. Do you think that the disinterment of dead people is 
promotive of good health ? 

Mr. Gibson. I never was an undertaker. 

Mr. O'Connor. But you undertake to say that a Chinaman dead is 
very healthy! 

Mr. Gibson. I said that in a sort of ironical way — that our legislators 
had imposed a very heavy burden on the taking away of a dead China- 
man, while they wanted to drive the living Chinamen away. 

The Chairman. How long were you a missionary in China ? 

Mr. Gibson. Ten years. 

The Chairman. What success did you have in reforming the Chi- 
nese? 

Mr. Gibson. I had fair success. 

The Chairman. How many converts did you make? 

Mr. Gibson. I do not know how many I was instrumental in making. 
The mission to whkh I belonged was started in 1849. I went there in 
1855, For the first ten years of its history we had no convert ; not one 



DEPRESSION IN LABOR AND BUSINESS. 343 

That mission to-day numbers over 2,000 individual Christians in that 
one locality. It has some 84 Chinese preachers. Thirty of them are 
ordained. It has some 60 chapels, and the mission work extends from 
Foo Chow to Amoy, where it is connected with the mission of the Re- 
formed Church of Amoy ; so that now a man can start from Foo Chow 
and travel all the way to Amoy surrounded by Chinese Christians. 

The Chairman. What wages do Chinamen get at home in the ordinary 
employments of life? 

Mr. Gibson. When I lived there we paid carpenters 40 cents a day — 
400 cash. We paid common laborers 150 cash to 200 cash a day, which 
would be from 15 cents to 20 cents a day. Chair- bearers are hired 
by the month, at $3.50 to $4 a mouth. I am giving you the Chinese 
prices. Among American merchants chair-bearers would get about $8 
or $10 a month. 

The Chairman. Are you familiar with the condition of the Chinese 
people here ? 

Mr. Gibson. I kno*v something of it. 

The Chairman. Are you a property holder in the Chinese part of the 
city? 

Mr. Gibson. No, sir. 

The Chairman. Do you receive no rents from the Chinese? 

Mr. Gibson. Yes, I have a leaseof a building in which Chinamen live. 

The Chairman. What rents do you receive from that building ? 

Mr. Gibson. We have a lease of a building for which we pay $450 a 
month, and keep np our own repairs, and furnish our own water and 
gas, and we receive from the Chinese tenants about $500 or $520 a 
month, leaving us from $10 or $15 to $50 a month. 

The Chairman. To what class of people do you rent that building ? 

Mr. Gibson. To Chiuese. 

The Chairman. Men or women ? 

Mr. Gibson. Men. Some of them have their families with them. 

The Chairman. Is it a common thing for a Chinaman to have a 
wife ? 

Mr. Gibson. It is not a common thing; but this thing has taken 
place among Chinamen within the last five or six years. A Chinaman 
finds himself in this country. He gets one of these women, buys her, 
pays her or induces her to run away with him, and he takes her and 
lives with her as his wife and raises a family. 

The Chairman. Is plurality of wives common among the Chinese ? 

Mr. Gibson. It is lawful in China, but it- is not very common. 

The Chairman. Is it common here ? 

Mr. Gibson. I understand that the laws in California do not allow it. 

The Chairman. Is it the practice of Chinamen here? 

Mr. Gibson. I do not know that it is very largely the practice, but I 
think it is a fact that some of the Chinamen here do keep two or three 
wives. I think, however, that it is only the rich Chinamen who do 
this, because it is quite expensive, and common Chinamen cannot afford 
it. There are very few Chinawomen here as compared with the men. 
The cases are increasing rapidly where Chinamen take these women 
and live with them as their wives; and some of the men in the building 
which I lease, have brought their wives and children. Children have 
been born there, and are now big- enouglT to go to school. 

The Chairmman. What proportion of women in the Chinese quarter 
of this city are open, notorious prostitutes? 

Mr. Gibson. Use larger part of them ; I do not know the exact num- 
ber. They are brought here for that purpose. 



344 DEPRESSION IN LABOR AND BUSINESS. 

The Chairman. You say that you are a missionary to the Chinese 
here to-day? 

Mr. Gibson. Yes, sir. 

The Chairman. Where are your headquarters ? 

Mr. Gibson. 916 Washington street. 

The Chairman. Is that in the Chinese quarter? 

Mr. Gibson. No, sir; it is just outside of the Chinese quarter. 

The Chairman. What is your system ? 

Mr. Gibson. An educational system — to educate them in the English 
language, so far as I can. 

The Chairman. Have you children attending your school now ? 

Mr. Gibson. Yes ; children and men. Men who work all day have 
come to the school at night, and have made good progress. 

The Chairman. Do they embrace the Christian religion ? 

Mr. Gibson. Some of them do. 

The Chairman. Do they hold on to it ? 

Mr. Gibson. Many of them — nearly all. 1 have Bad very little trouble 
from backsliders. I have had two or three instances of the kind. I 
have baptised 114 iu my mission, six of whom were Japanese, and 1 can 
say, with all due deference to the fidelity of our own people, that the 
Christian Chinese show as true marks of being Christians as are shown 
by any people. 

Mr. Dickey. How many Chinamen are therein this city who profess 
the Christian religion? 

Mr. Gibson. 1 should say that there might be 400 in the absolute com 
muniou of the church iu this city. There are more than that in the State 
although the majority of Chinese Christians are in this city, Oakland, 
and San Jose. 

The Chairman. We are informed that the burial of a Chinese infant 
is unknown, and that it is not known what disposition is made of Chi- 
nese children who die here ? 

Mr. Gibson. 1 never knew one of them that was not buried. 

The Chairman. Have you attended any funerals of Chinese children ? 

Mr. Gibson. I have seen Chinese children buried. There was one 
buried from my mission. 

The Chairman. How many burials of Chinese children have you prob- 
ably attended ? 

Mr. Gibson. I have never attended more than one. 

Mr. Dickey. Was that a child of persons converted to the Christian 
faith ? 

Mr. Gibson. No; it was the child of a woman who ran away; and 
then the child died. But I have seen Chinese bury their children. 

Mr. Dickey, The charge is that the Chinese children disappear, and 
that it is not kuown what becomes of them. If you are. a missionary 
among them you have a good opportunity of knowing. How many in- 
fants 7 burials have you known of during the ten years that you have 
been on this mission ? 

Mr. Gibson. I cannot recollect. I should say that I have seen four or 
five. I have not attended their burials, but I have seen the funerals of 
children going out to the cemetery. I think a great mauy of these things 
are said for effect. The Chinese have many things which are objection- 
able — very many — bu tit would be as well to confine ourselves to facts as 
to go after myths. 

The Chairman. Do you entertain the idea that the Chinese people 
on the Pacific slope can be Christianized and made to assimilate with our 
people and institutions? 



DEPRESSION IN LABOR AND BUSINESS. 345 

Mr. Gibson. If you ask me whether I believe in the Christian religion 
yon will get it all. 1 say I do. If I did not believe it I would have no 
aith in the Christian religion. 

The Chairman. You have been ten years in converting 400 Chinese? 

Mr. Gibson. I should think that that was a very large work. 

The Chairman. Is it compatible for the institutions of China aud 
paganism to work in harmony with the institutions of the United States 
and Christianity ! 

Mr. Gibson. I have never known Chinamen, in any shape or form, to 
have any opposition to the institutions of the United States. The 
Chinese Government itself is more friendly with the Government of the 
United States than with any other government in the world. The habits 
of thought of the Chinese are more in harmony with republican insti- 
tutions than with any other. 

The Chairman. Then why is it that when Chinamen emigrate to this 
country they do not bring their wives and their property with them % 

Mr. Gibson. In the first place, the Chinese are not a people who take 
their wives everywhere. It is not their custom to do so, as it is ours. 
Their national custom is different. In the second place, the reasons 
why they do not bring their families here are quite obvious. The 
Chinese who come here are not in safety and peace themselves, aud of 
course they could not induce their families to come here. I had a young 
man in my school who is about thirty-five or thirty-six years of age. 
He had a good situation. He was making fair wages. He was an in- 
dustrious, economical, quiet man. He had a wife in China, and he 
wanted to bring her here, and to stay here, but his mother would not' 
allow his wife to come here, and the wife would uot come. She said, 
"if we go there we will be killed." On the one hand we are asked why 
the Chinese do not bring their wives with them here, aud on the other 
hand they are told that they will be killed if they come. 

The Chairman. Then you believe it a problem of easy solution that 
the Chinese character can be made to harmonize and to unite with the 
American character, including its politics and religion ? 

Mr. Gibson. I think it is a problem that can be solved. 

The Chairman. By what process ? 

Mr. Gibson. By the same process which takes place with all other 
peoples. I believe that the Christian religion itself is the first and 
greatest cure for all these evils, and that our institutions, properly 
carried out (which I am sorry to say is not always done in this country 
and city, and especially in the Chinese quarter), wiil have their influence 
on the Chinese. If the efforts of this municipality had been to correct 
the evils in Chinatown honestly and fairly, without looking to plunder, 
we should have got on much better. 

The Chairman. You think that there is a desire on the part of the 
people here to deprive Chinamen of their property ? 

Mr. Gibson. Not on the part of the American people in general. 
There are in individual cases. There is a very large class of the people 
here who, in the present state of excitmeut and race- prejudice, think it 
perfectly lawful to get anything from the Chinaman. They will steal 
from you if they have a chance : but you are better protected than the 
Chinamen. 

The Chairman. Is the Chinese standard of character higher than the 
American standard ? 

Mr. Gibson. No, sir; because Christian civilization is the highest in 
the world. 



346 DEPRESSION IN LABOR AND BUSINESS. 

The Chairman. Leaving the Christian civilization out, would you put 
the American and Chinaman on the same level U 

Mr. Gibson. If you take away the Christianity out of our civilization, 
and take out the uudoubted effect of Christianity on our civilization, I 
do believe that the Chinese civilization would be quite equal to ours. 
The books and teachings of Confucius, their great philosopher, whom 
they all profess to follow, are known and read by all men as the purest 
morality of any heathen nation. These writings dwell largely on the 
necessity of filial piety. Under the teachings of Confucius it is a crime 
in a young man to be unfilial towards his parents. 

The Chairman. Are the Chinese immigrants to this country impressed 
with these ideas derived from the teachings of Confucius ? 

Mr. Gibson. All Chinamen have these ideas. Some of them hold 
them lightly. Here, in the warfare of races in this country, and in the 
excitement of getting money, the Chinamen, like all other people, have 
become demoralized. The Chinese are not, however, the only people 
in this country who have turned away from God. 

The Chairman. Have you found in your travels, in this or any other 
country, so large a number of prostitutes, in proportion to population, 
as you find in the Chinese quarters in this city ? 

Mr. Gibson. Within four blocks of Chinatown there are as many 
white prostitutes as there are Chinese prostitutes in all Chinatown. 
That is my answer. 

The Chairman. How many Chinese prostitutes do you estimate that 
there are in Chinatown ? 

Mr. Gibson. I should judge that the number might be in the neigh- 
borhood of 2,000, more or less. 

The Chairman. Are those all the Chinese women in the city % 

Mr. Gibson. No. I think there are 400 or 500 more Chinese women 
in the city. 

The Chairman. Do I understand you to say that adjacent to China- 
town, in the city of San Francisco, there is any such number ofjwhite 
women who are prostitutes % 

Mr. Gibson. Certainly ; known and read of all men. Any witness 
whom you may call to the stand will tell you the same thing. Large 
numbers of these women are imported from Europe. 

The Chairman. Prom what countries ? 

Mr. Gibson. Some from France, some from Germany. 

The Chairman. What proportion of them, in your judgment, is of 
American birth ? 

Mr. Gibson. A very small proportion ; I should think less than half. 
But that is only an opinion ; only giving an approximation. I have no 
data on the subject. I have been through these places with a police- 
man. 

The Chairman. Are the white prostitutes in the vicinity of China- 
town supported and maintained by Chinamen or by white men % 

Mr. Gibson. I think mostly by white men. I have been told that 
some of their places have back doors which open into Chinatown ; and 
that when they do not get enough custom from white poeple to make 
their business pay, they open the back doors and let in Chinamen. 

The Chairman. You state an alarming fact about the morality of 
your city when 5011 say there are 2,000 white prostitutes in the neigh- 
borhood of Chinatown ; but you save American credit in the matter by 
saying that not half of these women are American born. 

Mr. Gibson. I think less than half. 

The Chairman. Do the Chinese have a hand in the importation of 
these white women from Europe f 



DEPRESSION IN LABOR AND BUSINESS. 347 

Mr. Gibson. I do not think so. I think that that is done by the 
Christian people you were speaking of a while ago. These are Christ* 
ian prostitutes, I suppose. '~~^S 

The Chairman. Do you have any indications in your own mind of 
elevating the general character of the Chinese in this country through 
Christian cizilization ? 

Mr. Gibson. Yes, sir; I believe that the Christian mission- work among 
the Chinese people in this city and in the surrounding towns, is quite 
as fruitful in results as the Christian work of our general churches 
among the white people. 

The Chairman. You think that you make as much headway among 
the Chinese as other clergymen do among white men ? 

Mr. Gibson. That is precisely what I mean. 

The Chairman. Then you assume as a matter of fact, that the 
Chinese are just as susceptible of Christian culture in the way of mo- 
rality, as the white people are? 

Mr. Gibson. I do not know of any reason why they are not. The 
Chinese are very set in their customs, and they strongly adhere to their 
belief. But the Chinese are a sensible people. They are a reasoning 
people. They are a very material people. That is the greatest trouble 
that the missionaries find among them. 

The Chairman. Do you think the Chinese element a good stock to 
graft upon in this country? 

Mr. Gibson. If I could have my own personal preference I would 
prefer American -born people very much. I do not like any people born 
elsewhere so much. . 

The Chairman. What idea would you h^ve of a cross between 
Americans and Chinese? 

Mr. Gibson. It would not be the worst cross that we are obliged to 
have. 

The Chairman. Can you conceive of a worse one % 

Mr. Gibson. Yes. 

The Chairman. Let us know what it is. 

Mr. Gibson. I think that a cross between the American and Mex- 
ican Indian is worse, and I think that a cross with the colored people 
is a little further removed. 

Mr. Dickey. You say that the common price of labor in China is 
about 20 cents a day ? 

Mr. Gibson. It was from 15 cents to 20 cents a day when I left China. 

Mr. Dickey. \Yas that about the cost of living? Did the laborers 
live on that? 

Mr. Gibson. Yes, one man can live on that in China. He cannot save 
much money on that, but he can live in that way which they call com- 
fortable. They are a very economical people. All that they want is 
plenty of rice to eat. They are healthy and strong. To all physical 
appearance they are as healthy and strong as you will find men in most 
parts of Europe, Germany, England, and elsewhere. 

Mr. Dickey. Then the price of labor inChina is graduated to the price 
of living i 

Mr. Gibson. I suppose so. That is a matter of political economy 
everywhere. 

* Mr. Dickey. Is it not true, with the Chinese labor in San Francisco r 
that the wages are graduated to the cost of living whenever the China- 
man competes with the white man? 

Mr. Gibson. If you come to a test case between ^Chinese and Ameri- 
cans, I think that the Chinaman, in point of economy, will heat the 



348 DEPRESSION IN LABOR AND BUSINESS. 

Americans; but if you will take 100 Chinamen in this city working at 
$16, $20, $30 a month, and if you take 100 white people working for 
the same wages, you will find that the Chinamen will pay as much for 
his absolute food as the 100 white men will pay. All this stuff about 
Chinamen living on 3 or 4 cents a day, and on rats and such things, is 
an error. To my certain knowledge there is no truth in it. The aver- 
age Chinaman pays as much for his actual food as the average Ameri- 
can who does the same kind of labor. 

Mr. Dickey. Does the Chinaman indulge in beer and wine as the 
white man does ? 

Mr. Gibson. Not to that extent. But with the Chinaman the counter- 
part to the whisky-drinking is opium. • Opium is the curse of China 
and the curse of the Chinese people ; but opium does not make China 
men as wild as whisky makes white men. You do not see opium drunk- 
ards on the streets. The use of opium is bad. It is ruinous to the health 
and property of the consumer, but it does not ruin anybody else. 

Mr. Dicker. Do you observe, in your intercourse with the Chinese 
who become Christians, that they have any other motive in being 
converted than a desire to become Christians ? Do they have an idea 
that they can make money out of it? Are they an avaricious people, 
so that they will do anything for money ? 

Mr. Gibson. It is the sin of Chinamen that they want money. Ameri- 
can people, I suppose, do not want money, but Chinamen do. Still I do 
not think that the Chinamen become Christians from any avaricious 
motive. It is not to their advantage to become Christians. They lose 
by it among their own friends. 

Mr. Dickey. Why do #o slur the white people in this city by saying 
that they do not love money % 

Mr. Gibson. I do not intend it as a slur, but merely as a piece of 
irony. It is commonly brought up as an accusation against the Chinese 
that they love money. 

Mr. Dickey. Still, you have not answered my question, which was 
whether you observed that the motive of Chinamen in becoming Chris- 
tians was to make money. 

Mr. Gibson. I answered the question by saying that I do not believe 
that Chinamen had any avaricious motive in becoming Christians. 

Mr. Dickey. Would you have any action taken by the Government 
of the United States to prohibit future immigration from. China to this 
country ; or would you throw the gates wide open and allow Chinamen 
to come in ad libitum ? 

Mr. Gibson. My mind is in a little doubt about the matter. I want 
the whole question of immigration to take the same form. In the first 
place, the policy of the country has been to open the doors to all. If 
we can stand that policy, let us go on with it ; but I do not believe we 
can. Therefore, I am in favor of a limitation of immigration from all 
foreign countries; not from China alone. Our country is being filed up 
with the worst classes of Europe. If we only had good immigrants 
from Europe, we could take them all, and the national stomach could 
digest them. But we are getting from Europe the worst classes, which 
those countries send here in order to get rid of them. They are more 
of a curse to this land than the Chinese are. The danger that threatens 
the country to-day is not from Asia, but Europe. 

Mr. Dickey. Do the best classes of Chinamen come here as immi- 
grants ; or, as a rule, do only the laboring classes come here ? 

Mr. Gibson. The rule is that the laboring classes come here. 

Mr. Dickey. Do you not think, as a rule, that the lower classes of 



DEPRESSION IN LABOR AND BUSINESS. 349 

China people are more degenerate than the lower classes of the Euro- 
pean nations? 

Mr. Gibson. Perhaps you did not understand me as to classes. I 
mean the class of people that come here from Europe to open beer 
saloous, and to sell liquor, and generally to turn everthiug wrong side 
up. The people of that class are against the government from beginning 
to end. That is exactly what I mean. I mean no slur on anybody ; but 
I mean to tell what is true, let it hit whom it may. 

Mr. Dickey. Are you a lessee of property on Jackson street? 

Mr. Gibson. I have already stated that I leased property on Jackson 
street. 

Mr. Dickey. Do you know whether that property was examined^at 
any time by the board of health of this city J ? 

Mr. Gibson. Yes. 

Mr. Dickey. And that it was condemned. 

Mr. Gibson. Not the whole building, but the lower floor. 

Mr. Dickey. What was the objection to it f 

Mr. Gibson. They stated that it was not fit for habitation. 

Mr. Dickey. Why ? 

Mr. Gibson. Because it was dirty. 

Mr. Dickey. Who made it dirty 1 

Mr. Gibson. Chinamen. 

Mr. Dickey. Then the Chinamen were living in such a filthy condi- 
tion in one of your buildings that the board of health was called on to 
condemn it % 

Mr. Gibson. Yes, sir. Now may I explain about that ? 

The Chairman. You have a right to explain. 

Mr. Gibson. I had leased one of the floors of that large building 
from a Chinaman for a chapel in which to preach the gospel. I had 
fitted it up and used it as such, and was to have it as long as I had use 
for it. Then it was found that this room which I was occupying would 
be good for an opium-den or a gambling shop, and I was notified to 
leave ; but it was necessary for me to hold to one place as a base of 
operations. If I could be permanent in this one place for years, the 
Chinaman would learn that I meant business. So, as a business mat- 
ter, it was important for me to hold that place. I told the Chinaman 
who leased the building that 1 could not leave, and, finally, he agreed to 
let me stay till October. In the mean time I found that his lease ex- 
pired at that time, and I leased the whole building myself. It was the 
nastiest and most disgraceful building in Chinatown when I took it. I 
commenced at once and spent all our surplus of rents in repairing and 
cleaning out the building, beginning on the upper floor and going down 
through the house as fast as the monthly rents enabled me to do so. In 
the basement of the building was a lot of very ordiuary, bad men. I got 
through the upper story, and the second story, and had already ordered 
the materials for changing the lower floors and changing the renters, 
when Mr. Kearney took some men there one night so as to make a case 
against me. The board of health did this for the purpose of making 
political capital, when already I had the material all ordered to do the 
repairing, and I only asked them to let me have another week for the 
purpose. 

Mr. Dickey. In other words, the building had become so filthy that 
you yourself had condemned it ? 

Mr. Gibson. Iu other words, it was so filthy that I condemned it the 
first. The board of health should have condemned it before I took it. 
Mr. Dickey. Is there any other race or class of people besides these 



350 DEPRESSION IN LABOR AND BUSINESS. 

Chinamen who congregate together in this city and live in such a 
filthy condition ? 

£ Mr. Gibson. I have had occasion to rent some rooms in the basement 
of the mission-house in Washington street, a common tenement house, 
and I have found all classes of peoule there, Spauish, German, Ameri- 
can, French, Japanese, and negroes. I never let any Chinese in there. 
I have had among these different nationalities (outside of the Japanese, 
for they a are very comfortable people) worse cases than I ever saw in 
Chinatown. I had to turn the tenants all out and lose all the rent. 

Mr. Dickey. Was it because they would not pay their rent that you 
turned them out % 

|- Mr. Gibson. It was because they were drunken and dirty. Drunk- 
enness is the great crime of this class. 

Mr. Dickey. But you do not find bodies of men of other nationalities, 
except Chinese, living together in this city as the Ohiuese do ? 
1 \ Mr. Gibson. I think that the Chinese people live more crowded than 
any other people. That is evident to everybody. 

Mr. Dickey. Do you know what diseases prevail among the Chinese 
people ? 

Mr. Gibson. The same diseases as prevail among other people. 

Mr. Dickey. Is there any leprosy among them ? 

Mr. Gibson. We have had a good deal of talk here about leprosy ; but 
I think it is the general conviction of the medical fraternity that there 
has been no case or hardly any cases of genuine leprosy here. There 
is a sort of elephantiasis that is prevalent, and there have been, per- 
haps, a dozen or fifteen cases of it. I have never seen any myself. I 
only know what the newspapers say. There is one man in the city who 
talks a good deal about these leprosy cases, but I believe that he has 
not been able to prove as many as he talks about. 

Mr. Dickey. lias it come to your knowledge that the authorities of 
this city have shipped or sent away Chinamen on account of their be- 
ing attacked with leprosy ? 

Mr. Gibson. Yes, I have read such things in the newspapers. A cer- 
tain policeman was telling me about it, and he said, "Of course, they had 
some skin diseases, and we reported them as leprosy." I have no per- 
sonal knowledge of it. 

Views of Mr. M. J. Donovan. 

Mr. M. J. Donovan came before the committee. He stated that he 
had been a member of the State senate, and chairman of the legislative 
committee of investigation into the Chinese question. He read from a 
report of that committee some testimony in regard to the building 
leased by Mr. Gibson, and said : Mr. Gibson conveyed to you the im- 
pression that the building in question had been leased by him only 
lately. Now, here is sworn testmony in regard to that same building, 
taken more than three years ago, when the building was also leased by 
Mr. Gibson. 

Mr. Gibson (interrupting). Has this anything to do with the labor 
question 1 ? 

The Chairman. The witness has a right to contradict your statement. 

Mr. Donovan. When the people of this city are attacked by a wit- 
ness in the infamous manner in which they have been attcaked by Mr. 
Gibson, is it not fair to say a word in their defense! 

The Chairman. If Mr. Gibson has stated things which you know not 
to be correct, you have a right to state your views of the question, But 
we do not want a statement in the form of declamation. 



DEPRESSION IN LABOR AND BUSINESS. 351 

Mr. Donovan. Three years and a half ago I examined that building 
which has been the subject under consideration, and in regard to which 
the people of San Francisco have been abused for compelling this gen- 
tleman to have it cleaned. Mr. Gibson conveyed the impression, as I 
understood it, that nothing was done about the building until after he 
had leased it, and that then they immediately went to work to compel 
him to clean it. Now, here is sworn testimony given before the Senate 
committee at the time I speak of (reading): 

Q. Would you believe that a hog could exist there unless you saw it ? — A. It would 
make very bad meat for butchers. 

Q. Do the Chinese live there? — A. They do. 

Q. Give a description of it. — A. It is almost indescribable. 

Q. Who is the landlord? — A. Rev. Otis Gibson. 

You mast understand that in our city we have an ordinance against 
erecting wooden buildings within certain limits, but the representatives 
of China can always have that ordinance suspended where the white 
man cannot. I merely say that to show you how these people have been 
persecuted. 

The Chairman. Go on and give 3-our ideas with reference to this con- 
flict between Chinese and American labor. 

Mr. Donovan. The particular branch of labor in which I am inter- 
ested is that of house painters. I am a house-painter, employing a good 
many men at times. At present I am employing very few. 

The Chairman. What is the average number of men that you em- 
ploy ? 

Mr. Donovan. From 30 to 80 men. 

The Chairman. Has that been the average for several years I 

Mr. Donovan. Yes, sir. At present we are employing very few. In 
years past we did some work in Chinatown, and we did work in other 
places. But now the Chinese themselves do all the painting that is 
done in Chinatown. Yesterday I was down at the Pacific Mail Steam- 
ship Company's wharf, and I saw eight or ten Chinamen painters at 
work there. In the town of San Leandro, which is quite a thriving 
place across the bay, the Chinamen have monopolized the painting 
business entirely. Last week I met a Chinaman who asked me if I 
could not give him employment. I said, " Well, John, I do not know. 
If you are working cheap I may hire you." He said, " Yes, yes. What 
do you pay your men % n I said, " I pay $9 a week." " Well," said he, 
"I will work for $8." "But," said I, " times are getting hard, John, 
and I am going to cut my men's wages down to 86." " Me work 
cheaper," said he; "me work for $3 a week." That is the position of 
the paiutiug business here. 

The Chairman. State whether the interference of this cheap Chiuese 
labor is destroying that branch of business '? 

Mr. Donovan. It has destroyed all that branch of business in the 
portion of the city known as Chinatown, and I should judge by what I 
have seen that it has destroyed a good portion of it all over the State. 

The Chairman. Has this Chiuese competition been the means of 
driving white painters back to the East? 

Mr. Donovan. Yes. It has been the means of driving to the East 
those who bad sufficient money to get there. There are hundreds of 
men on the streets to-day who, unfortunately, cannot get sufficient money 
to pay their railroad fare back. The Chinese are today doing painting 
in special cases for about 33 per cent, less than is paid for the same 
character of work in the East. In the window-blind factories here 
Chinamen put on a coat of paint at the cost of 3£ cents per pair of blinds, 



352 DEPRESSION m LABOR AND BUSINESS. 

whereas in the Eastern States the price of similar labor, under similar 
circumstances, is from 10 to 25 k cents per pair of blinds per coat, so 
that the Chinamen not only eompeto with our people here, but they can 
perform labor at a much less price than it can be done for in the East. 
The Chairman. What wages do those Chinamen get whom you 
recently saw engaged in painting ? 

Mr. Donovan. 1 cannot tell you. The only way I can arrive at an 
idea of their wages is from the iustance which I stated to you about the 
Chinaman the other day wantiug me to engage him. 

The Chairman. Is paint manufactured here from the raw materials"? 

Mr. Donovan. Yes. 

The Chairman. By whom is that work doue ? 

Mr. Donovan. I have not been to the factories recently. I under- 
stand that one of the white-lead establishments employs Chinamen, but 
I cannot say positive. I have been engaged in the business of manu- 
facturing woolen goods, but not to any great extent, and I found that 
Chinamen were offering to work at from 60 to 80 and 90 cents a day. 
They were willing to work as weavers at 80 cents, and were williug to 
work in the higher grades from 90 cents to $1 a day. One of these 
higher grades is called a dresser, and in the Eastern States dressers re- 
ceive from $1.75 to $2.50 a day. In California, however, Chinamen 
offered to perform that work at 90 cents, and one of them, who was 
recommended as a first-class man, was willing to work for a dollar and 
a bit. At one time we thought that we would be able to manufacture 
clothing. We had offers from Chinamen to manufacture undershirts 
for 50 cents a dozen, and drawers for the same price — we to furnish 
the materials. 

Mr. Dickey. How many of those shirts could a man make in a day 1 

Mr. Donovan. I do not know ; but I was informed that the price in 
the East for the same character of work is $1.50 per dozen, aud these 
men offered to do it for 60 cents. In the manufacture of clothing gen- 
erally that same proportion prevails. The Chinamen are to-day work- 
ing here for less than they did a year ago. Eastern competition has 
compelled them to work so much cheaper. 

The Chairman. What has become of the men who used to be engaged 
here in the clothing business ? 

Mr. Donovan. There can be here practically no manufacture of cloth- 
ing except through or by the Chinese. Their wages are established just 
high enough to be always less than the wages of white men. When 
the white man's wages is depressed to the extent of 5 cents a day the 
Chinaman's wages is also depressed 5 cents a day. The Chinaman al- 
ways keeps under the white man. In the butchering business, for in- 
stance, every hog that is killed in San Francisco and every bit of pork 
that is made passes through Chinamen's hands. They have entirely de- 
stroyed white competition in that line. 

The Chairman. How do you account for that 1 

Mr. Donovan. Simply because the Chinaman can work cheaper than 
the white man. 

The Chairman. Can the Chinese make the offal of the hog available? 

Mr. Donovan. Yes; they can do anything that a white man can do. 
They are the equals of the white man in all positions of life, and they 
are superior to the white man from the fact that they can exist for one- 
fifth of what white men can exist for. 

The Chairman. They are less dainty, of course, as to what .they eat? 

Mr. Donovan. They are less dainty. 



DEPRESSION IN LABOR AND BUSINESS. 353 

Mr. Martin. And they are not very particular if they eat anything 
at all or not ! 

Mr. Donovan. They have to subsist. Mr. Gibson told you that white 
girls could get work at $15, $20, and $25 a month wages. That is not 
true. There are many white girls here looking for work, but they are 
not fitted for the general character of labor which they are expected to 
perform. And another reason why Chinamen are hired here for domes- 
tic purposes is that if the Chinaman gets $20 a month and the white girl 
gets $20 a mouth, the Chinaman is still the cheaper by $10 a mouth, be- 
cause the white girl must have a bed-room to sleep in, while the China- 
man takes a little mat and sleeps on the floor, and consequently the 
family can get on with one room less, or can rent that one room at prob- 
ably from $8 to $10 a month. Of course, this consideration is to the 
advantage of the Chinaman. If a Chinaman works in a family for $25 
a month, he saves it all; noue of it remains in this country. Sis cloth- 
ing is imported from his native land, and his savings of years go back to 
China. The number of Chinamen in this State has been underesti- 
mated by all the persons who have been before this committee. In the 
committee of the State senate, of which I was a member, the presidents 
of the six Chinese companies testified that in the months of May and 
Juue, 1S7G, there were 148,000 Chinamen in the United States members 
of those companies, and that there were other thousands of Chiuamen 
here who did not belong to those companies. They left the number for 
us to estimate, and we approximated the whole number at probably 
160,000. But that there were 118,000 here at that time there can be no 
question about, because that was the testimony of the presidents (all 
Chinamen) of the six companies, and since that the number of China- 
men has been increasing. 

The Chairman. Oau a Chinaman come to this country or depart from 
it without the approval of the six companies ? 

Mr. Donovan. It was testified to before the Senate committee, of 
which I was a member, by the Rev. Dr. Loomis, a missionary, that no 
Chinaman could leave this coast except by the permission of the six 
companies, or of the Eev. Otis Gibson, or of himself, individually. 

The Chairman. What did you learn in regard to Chinamen leaving 
here % 

Mr. Donovan. So far as we could learn, that matter was compara- 
tively a sealed book. It was impossible to get at their inner 'secrets. 
It was in testimony before the committee that the Chiuamen held their 
secret tribunals here, and that in these secret tribunals they punished 
criminals aud condemued offenses irrespective of the laws of the country, 
and that the}' used the laws of this country to pervert justice to the 
orders of these tribunal*. For instance, some China man or woman who 
was objectionable to a certain company would be arrested; a warrant 
would be sworn out for the arrest of Hong Lo or Yung Lee. That per- 
son would be arrested and bailed out, and would immediately disap- 
pear. Again, when Chinamen were arrested for murder, Chinese wit 
nesses were notified that if they appeared against the criminal they 
would be murdered. That statement was made by a witness to the dis- 
trict attorney of Sacramento, Mr. Jones. The district attorney said to 
him, '-The laws of America are sufficiently strong to protect you, and 
we will protect you." The Chinaman said, u No; you cannot. " The 
district attorney said, " We will." So the Chinaman gave his testi- 
mony, and twenty minutes after he*left the court-room he was mur- 
dered on the streets of Sacramento by Chiuamen. That was testified 
to by the district attorney of Sacramento. There were at least six or 
H. Mis. 5 23 



354 DEPRESSION IN LABOR AND BUSINESS. 

eight circumstances of the same kind testified to before us. It is in 
evidence in this volume (copies of which I shall present to this commit- 
tee) that the Chinamen have secret tribunals in which they arbitrate 
to settle disputes irrespective of our laws. It is in evidence'' that these 
Chinese courts had placarded on the corners of the streets papers offer- 
ing rewards for the murder of Chinamen who had testified, or would 
testify, in our courts of justice, truthfully, against Chinamen. It was 
also testified before that same committee b\ Frederick Low, ex-gov- 
ernor of the State of California and ex-minister to China, that the daily 
wages of Chinamen in Hong-Kong were from 6 to 10 cents; that for a 
single day a Chinaman could be hired for 10 cents a clay, and that on 
that pay he lived comfortably, It was also testified to by the same 
witness that no foreigner would hire a Chinaman as a servant, if he 
was acquainted with the customs of the country, without taking a 
bond for his honesty, as it was generally admitted that, at sometime or 
other, the Chinaman would of necessity steal. One of the reasons why 
our boys and girls here do not engage in labor (in addition to the fact 
that the Chinaman is always ready to work for less than the white 
man) is this : that the Chinaman is looked upon as belonging to an in- 
ferior and degraded race, and any association with Chinamen in the 
workshops and different avenues of employment is regarded by white 
men as a degradation. You can understand what effect that will 
have on labor. It tends to make the laboring man, and particularly 
the men of my nationality, despised. As to the influence of this 
Chinese population on the morals of the community I can also speak, 
for I have lived here some fifteen years. I have known more young 
men and girls here who have been destroyed by the solicitation of 
Chinese prostitutes and by the use of opium, which can be indulged in 
in the opium-dens at from 3 to 5 cents, than have been converted by all 
the Christian ministers on this coast or in China in twenty years. It 
happened to be my fortune in my younger days to teach a Sunday-school 
class. Two Chinamen came in there to be taught Christianity. I be- 
lieved that it was my duty to teach them Christianity, and I tried to do 
the best I could. When they first came they could not talk very good 
English. I met one of these fellows one or two months after he had 
left the school, and I said to him, "John, why do you not come to Sun- 
day-school any more V 9 He said, " Me sabee English ; me catch Eng- 
lish first-rate." That is all they go to Sunday-school for; and that is 
the testimony of all persons except a few Christian missionaries who 
are engaged in that noble work. I do not use that expression irrever- 
ently, because I think it is a noble work to christianize any people. All 
that I mean to say is that I think the missionaries are mistaken, and 
that they should commence to christianize their own race, not the Chi- 
nese. The particular evil of Chinese immigration is this, that the Chi- 
nese in this country are a race of producers and not a race of consum- 
ers. They produce here millions of dollars' worth of property, and 
they consume nothiug except the dollars which that property represents, 
and these dollars are transferred to their native land. It has been esti- 
mated that in the 30 years that the Chinese have been coming to our 
shores they have taken from $200,000,000 to $400,000,000 of gold and 
silver coin and bullion from this country, for which they have given us 
no return. In other words, they are like a little nation alongside of us, 
making every year $30,000,000 of.goods, sending them into this country, 
and (having no reciprocity of trade) putting that $30,000,000 in their 
own coffers. I will put at the lowest figures the amount that the Chi- 
nese have .taken from this country, and call it $200,000,000; and I call 



DEPRESSION IN LABOR AND BUSINESS. 355 

attention to the fact that in the financial report of the Treasury for 
1878 the total amount of money in the United States — in the shape of 
gold and silver coin and gold and silver bullion — is about $359,000,000. 
Now I ask, gentlemen, bow much of the depression of business in the 
East, and how much of the hard times, may have been occasioned by 
the withdrawal of S200,000,000 of gold and silver coin out of circula- 
tion, ana the transferring of it to another country without any equiva- 
lent to us? I am lower in my estimate of the amount withdrawn by 
the Chiuese than others are, and I think I am in error; but I wish to 
state nothing here that cannot be undoubtedly proven. It seems to me, 
however, that when more than one-half of all the bullion of the coun- 
try at the present time has been taken away by the Chinese, that would 
show that the Chinese had not only injured us in California, but that 
they had injured you in the East. It is claimed that the Chinaman has 
beuefited the people of this coast by inaugurating manufactures. There 
never was a greater mistake or falsehood. We build a woolen-factory, 
or a shoe-factory, for instance, and we employ one hundred or two hun- 
dred or three hundred Chinamen. The Chinaman comes and works and 
gets his wages, and these wages go into his own pocket. Have the peo- 
ple of San Francisco benefited anything by the employment of that 
Chinaman ? No. But the people of the East have been injured. We 
do not get a coat or a pair of shoes for any less money because the 
Chinaman makes them; and if we do not we are not benefited by the 
Chinaman's labor. There are only two parties who are benefited by it: 
one is the Chinaman himself, and the other is the employer of the 
Chinaman. That is the plain fact 5 and the people of the East who are 
employed in those manufactures are cheated out of their legitimate 
market on this coast without one particle of benefit to us. 

To-day there are hundreds of girls who would be glad to get employ- 
ment in factories, or in any place where they could work, for SI a 
day for their services. There was a shoe-factory out here where girls 
were getting $9 a week. Chinamen got work there at $7.50 a week ; 
and then the girls offered to work at $1 a day. Then the Chinamen of- 
fered to work at 85 a week. That is the history of this Chiuese compe- 
tition. Practically, the Chinaman can live here as cheaply as he can 
live in China; and the result of this Chinese immigration is this, that 
when our capitalists get a little more money, and get a few more China- 
men educated to make boots and shoes and woolen goods, and to manu- 
facture all classes of goods that are now made in the East, we will have 
large manufactories here, and we will ship our manufactured goods to 
the East, and undersell Eastern manufactured goods. That is to be the 
legitimate result, and will be the end of it. While the people of the East 
have not yet seen that the Chinese labor here has already done them 
an injury by destroying the market for the goods which they may have 
sent us, it has actually done them an injury by taking out of circulation 
that which is the life-blood of the country : and this withdrawal of gold 
and silver may have produced the severe depression which has taken 
place in the East. But that is something of the past. When we have a 
million Chinamen on this coast working at 12 J cents a day, manufacturing 
boots and shoes and clothes, and when we have thus destroyed the 
woolen and cotton and shoe-factories of the East, then the people of 
the East will realize that this Chinese question is a great question. I see 
that the Chinese have started a manufactory of woolen goods on their 
native soil. They have imported machinery from Germany and have 
erected two of the largest woolen mills in the world. They will not only 
supply themselves, but they will supply us. They are also making in- 



356 DEFEESSION IN LABOR AND BUSINESS. 

roads more dangerous. If they continue to make as much progress in 
the merchant-marine service for the next twenty years as they have 
done for the last five years, you will find no Americans engaged in ship- 
ping. If you visit the steamers of the inail-steahiship companies sub- 
sidized by the government of the United States, you will find that the 
fireman, the coal passer, the oiler, the steward, and all the employes are 
aliens, foreign to our land, having nothing in common with us. We say 
that theseChinese are barbarians. It is not so. They have a civilization, 
and we have another. Their civilization differs in character from ours. 
If we see anything that is brilliant or good in an Indian we take and ap- 
ply it. If we see anything in the Chiuaman that is brilliant or good, we 
take it and apply it. But we do not forego our civilization ; we consider 
him a barbarian all the same. If the Chinaman sees anything in our civ- 
ilization, in the arts, sciences, or manufactures, which can be beneficial 
to him, he immediately makes himself master of it, and partakes of the 
benefit of it. He has not the reverence or respect for us which the In- 
dian or African or any other barbarous race has. 

The Chairman. It has been represented here that there is as much 
prostitution in this city outside of the Chinese quarter among white 
women as there is inside of the Chinese quarter among Chinese women. 
What is your opinion on that subject 1 ? 

Mr. Donovan. I think, I am postitive, that that statement is incor- 
rect ; and even if it were true, the fact would not be so dangerous to 
the future existence of American civilization as the presence of the 
Chinese is ; and for this reason : if a boy nine years of age passes 
through Chinatown, there will be a tap at the window of every Chinese 
house of prostitution, and a Chinese woman will say, "Come in, Johnny; 
one bit." It was in testimony before the legislative committee of which 
I was a member (sworn to by Dr. Toland and Dr. Short, members of 
the board of health of San Francisco) that they had hundreds of cases 
in a year of boys from nine to twelve years of age with syphilitic 
diseases, which they had got in the Chinese quarter and from Chinese 
prostitutes. And it was also in testimony before that committee that 
no white girl, however low or degraded, was ever known to give disease 
to a child of nine or ten. 

The Chairman. Is it a fact that the proportion of prostitutes among 
the white people here is as large as it is in the Chinese quarter % 

Mr. Donovan. No, sir. The witness who conveyed that impression, 
by saying that there were as many white prostitutes as there were 
Chinese prostitutes, omitted to tell you that the white population of 
San Francisco is five times greater than the Chinese population. 

The Chairman. Even stated in that way it is a pretty alarming 
state of things. 

Mr. Donavan. I do not think it is true. I have not associated so 
much in that particular quarter as that gentleman (Mr. Gibson) has, 
and of course my information on that subject is not so good as his. 
Ohinaman pay a dollar a month room-rent, living in the European style 
^tnd renting rooms separately ; and if they get a more desirable shelf 
to be stored in (put as coffins are stowed away in a vault) they pay $1.50 
a month, together with $1.25 a week board. Sometimes there is a double 
tow of shelves along the wall of a room for sleeping-berths, and some- 
times there is only a single row, with just space enough along each 
bunk for a man to crawl in ; and there is a space in the center of the 
room, between the bunks; so that you can estimate how many Chinamen 
would be put into such a room as this. That is what I saw in the base- 
ment of the.Eev. Otis Gibson's house when I inspected it as a member 



DEPRESSION IN LABOR AND BUSINESS. 357 

of the legislative committee. The ceiling was so low that I could touch 
it with my finger. I would imagine that the space occupied by each 
Chinaman would be about 2 feet wide and 6| feet long. 

The Chairman. A little larger than a respectable coffin. 

Mr. Donovan. You must remember that he must have the meaus of 
ingress and egress, and he takes a little more room on that account. 

The Chairman. How is this thing going to result? 

Mr. Donovan. It can result in but one of two things. So far as my 
reading of history informs me, two distinct races aud two distinct civili- 
zations have never existed in any country together for any length of 
time, and, as history repeats itself, I believe they cannot exist here. We 
find that China has a population of 400,000,000, aud that in one small 
districtof thatempire nine and one half millions of people were starved to 
death within a year. These nine and one half millions would, of course, 
have come to California if they could have got meaus to do so. To them 
this country would be a comparative paradise. If nine and one-half mil- 
lions of people should come from China to this coast, willing to work for 
a pittance, willing to work for 10 cents a day. as they do in their native 
land, the result would be that, in order to compete with them, we must be 
degraded. Our common-school system, all our boasted Christian civiliza- 
tion, and the high salaries which we pay our miuisters for preaching the 
gospel of Christ crucified, could not be indulged in any longer. We 
would simply have a degraded race that would dwell, as the Chinese do, 
in a condition worse than that of hogs. ]Sow, we will not permit that. 
Before we come to that state of things we propose to do the other 
thing ; we propose either to leave this country or to die defending the 
race from which we spruug. And if we have to leave this country the 
men iu the East will have to leave. The Chinese built a wall around 
themselves and kept out the outside world for two thousand years ; aud 
now the outside world, in order to protect itself from those hordes of 
Mongolians, who are their superiors in the economies of life (because 
they can live for so much less), must keep tbem out. I expect to see 
every government in Europe, as well as in America, passing, within the 
next twenty years, restrictive laws against the Chinese, and passing 
special tariff laws imposing a heavier rate of duty on Chinese manufac- 
tured goods as agaiust the manufactured goods of any other race; for 
if the Chinamen in China can work for 7 cents a day in manufactories, 
then no country in the world can compete with them ; no country ou the 
habitable globe can do so, and that the Chinaman can do so is beyond 
dispute. The Chinamen are monopolizing the manufactures of this 
State. One of them goes to work and gradually learns a trade; he 
brings another along ; he says to his employer, " This is my brother; he 
is just from China, and I want him to learn something." He teaches his 
brother the trade and business. This one Chinaman teaches another, 
and, in the end, thousands of " brothers" know the trade. That is in- 
stanced in reports furnished to the British House of Commons. When 
the English first went to China they ran the steamers on the river with 
white men ; the deck-hand, fireman, coal-passer, steward, sailor, waiter, 
were all of the white or Caucasian race. To-day those vessels are ruu 
without a man above deckhand having one drop of Caucasian blood ; 
they are all Chinamen. The next thing the Chinamen will do will be to 
build the ships themselves and to sail them, and to transport their 
manufactured goods to every land ; and as their labor at home only 
costs 7 cents a day, they will be able to undersell the manufactures of 
every other country. 



358 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Martin. What legislation would you propose to remedy this 
evil 1 

Mr. Donovan. Either one of two things, either to allow the States 
to tax all foreigners, or any particular class of foreigners, $100 a head 
per year . 

Mr. Martin. Would you distinguish against the Chinaman! 

Mr. Donovan. Decidedly. He is the only foreigner yon have got to 
distinguish against. 

Mr. Martin. You would simply tax Chinamen, and no other for- 
eigners % 

Mr. Donovan. I would tax no other foreigners. There is no neces- 
sity for taxing any other foreigners. With other foreigners everything 
that they make here remains here in this country. 

Mr. Martin. What other legislation would you propose % 

Mr. Donovan. I would prevent Chinese immigration to this country. 
I would let no Chinaman come to this country, except as minister, or, 
if they choose, as missionaries to convert us to the worship of Joss. 
Or I would allow a few of them to come here to be taught in our colleges 
or schools; but no other Chinaman would I allow to come here. If that 
restrictive bill of last Congress, allowing only fifteen Chinamen on every 
vessel, had become a law, it would have settled the question. 

Mr. Martin. What would you do with those Chinamen who are already 
here % Would you legislate against them % 

Mr. Donovan. That is a grave question. I would legislate against 
them, if I could. If it was possible to send them out of the country, that 
would do the country the most good. But that question will settle itself 
in another way. The Chinamen who are here have no wives and no 
children. They are simply birds of passage. They come here, make a 
few hundred dollars, and then return to China. All go back to China; 
if not during their lives, at least in their coffins. I have never seen a 
Chinese Christian yet. I believe that it has been shown in the United 
States courts that the queue which the Chinaman wears is a badge of 
his religion, and Judge Field has just decided that, inasmuch as it is a 
badge of his religion, it cannot be interfered with. I have failed to see 
a Chinaman yet who has taken the trouble to have his queue cut off; 
and if the queue is the badge of his religion, and the loss of it would be 
evidence of his Christianity, then there are no Christian Chinamen here. 

Mr. Gibson. I wish to reply to the testimony of Mr. Donovan in re- 
gard to the sanitary condition of this house in Jackson street. When 
we took the house there was a well in the basement or hall, but from 
the time that we took it we had water from the Spring Valley Water 
Company. Our water bills monthly (all that time that it was testified 
that the Chinamen were drinking sewage) were from $35 to $40 and 
$50 per month. Then we sunk an artesian well 80 feet deep, and we 
have had water from that well ever since. If any one has since then 
drunk water from the old well, it would be as a matter of choice. I pre- 
sume that the part of the testimony in regard to that building is equally 
true with the other testimony given before that legislative committee. 

Mr. Dickey. (To Mr. Donovan.) I understood you to say that China- 
men are permitted to leave here for China if they have a permit from 
certain parties, and you named Mr. Loomis, Mr. Gibson, and the six 
Chinese companies. What authority has Mr. Loomis and Mr. Gibson to 
give permits to Chiuamen to leave this country"? 

Mr. Donovan. The only authority is this: that they and the Pacific 
Mail Steamship Company made a contract depriving every Chinaman 



DEPRESSION IN LABOR AND BUSINESS. 359 

of his liberty of returning to his native land without first obtaining 
their permission. 

Mr. Dickey. Are these gentlemen partners with the six Chiuese 
companies ? 

Mr. Donovan. I give you the facts, and leave you to draw your own 
inference. 

Mr. Gibson. Mr. Gibson is here, and can explain that if you wish to 
know. 

Mr. Donovan. I believe that if the Chinaman will pay 1 100 passage 
money he can getaway without the permission of these gentlemen. 

Mr. Gibson. I have personal kuowledge of all these matters, and can 
inform you about them. 

Mr. Dickey. I inquired of you when you were on the stand, and you 
did not kuow how Chinamen get away from this couutry. 

Mr. Gibson. You did not ask me how they got away. 

Mr. Dickey. Yes, I did. 

Mr. Gibson. I heard no question of the kind. If you wish to hear 
that matter explained, I can tell you. It was an effort to get the China- 
men out of the hands of those six companies. There is an insinuation 
that I am in league with the six companies to prevent Chinamen going 
home. That is not true, and I offer to deny it. 

Mr. Dickey. You heard the statement that these Chinamen cannot 
go back without permission, and when you returned to the stand you 
did not explain that matter. 

Mr. Gibson. I simply asked to make an explanation in regard to the 
— well, I made no remark except to answer questions. I should not 
have said anything if questions had not been asked me. 

Mr. Dickey. Is it true that you do sign, or ever have signed, permits 
for Chinamen to return to China? 

Mr. Gibson. I give a Christian Chinaman who wants to go home a 
certificate that be belongs to the mission and is a man of good char- 
acter. I sign my name to that certificate, and that delivers the man 
from being subjected to the six companies, who always collect a tax 
from the men who are on their records. But a Christian Chinaman 
withdraws his name from these companies when he becomes a Christian. 

Views of Mr. William B. Schaefer. 

Mr. William R. Schaefer appeared before the committee. He said, 
in reply to preliminary questions : I am a resident of this city, and have 
been for twenty-five years. I am a manufacturer of and a dealer in fur- 
niture. During the last five years I have had from 15 to 25 men em- 
ployed. I have now probably 15 men employed. 

The Chairman. In what way does Chinese labor interfere with your 
business 11 ? 

Mr. Schaefer. We can do the same work with Chiuese labor at 50 
per cent, less than we can with white labor, and yet we have entered 
into a combination not to employ Chinamen. We tested the matter 
with several articles and found that Chiuese labor is that much cheaper. 

The Chairman. Is Chinese labor the means of depriving white men 
of employment in your business ? 

Mr. Schaefer. Not at present, because, as I say, we have entered 
into a combination not to employ Chinamen ; but if we were to employ 
Chinamen they would drive all the white men out of employment. 

The Chairman. At about how much less cau you employ Chinamen 
than you have to pay to white men ? 

Mr. Schaefer. About 50 per cent. 



360 DEPRESSION IN LABOR AND BUSINESS. 

Vieics of Mr. William M. Haynie. 

Mr. William M. Haynie ca in e before the committee. He said: I 
have been a farmer for twenty-two or twenty-three years, and I want to 
make a statement in regard to the contracts by which Chinese labor is 
obtained. I have not heard any one testify here as to any knowledge 
of contracts being made in China for Chinese labor here. In 1874 I was 
employing a great many Chinamen in the hop culture — the picking of 
hops. I soon found that the Chinamen were making inroads on my 
business by raising hops themselves, and that I would have either to 
quit the business or they would drive me to the wall. I so stated to a 
Chinese firm in Sacramento City. One of the firm said to me, " Captain, 
I would like to go in partnership with you in the hop business on a big 
scale." I said, " What advantage will that be to me. Will I get any 
men cheaper than I get them now V " O, yes," said he, "aheap cheaper." 
I asked him " how." He said, "If you go into partnership with me we 
can make a contract in China for men at $85 a year, and they will 
board themselves, if you will give them 2 or 3 acres of land on which 
they can raise a little rice and some pigs for pork. That," said he, " will 
be all their board bill, $15 a year, which will make about $100 a year 
for the actual labor of the men employed in these industrial interests — 
hops or anything else." I said, "How can you do that? The laws of 
the United States Government prohibit the making of contracts in China 
fo labor on this coast, and if we were to attempt to make such contracts,. 
we would subject ourselves to imprisonment and fine." " Well," said he, 
" no one will know it. We can hire the men all the same, and we will 
make that agreemeut with you that they will only cost you that much 
in the year." I declined the proposition, and I quit the business. 

The Chairman. What did it cost you for white labor in that busi- 
ness ? 

Mr. Haynie Thirty dollars a month and board. This conversation 
occurred between me and a representative of the Chinese house of Mung 
Chin. 

The Chairman. And this man offered to procure Chinamen to do the 
same work for you at $100 a year. 

Mr. Haynie. Yes ; board and all. We paid the Chinamen whom we 
employed $1 a day. 

The Chairman. And they boarded themselves? 

Mr. Haynie. Yes ; the proposition of that Chinaman wasto furnish us 
men for about $100 a year ; that proposition proved sufficiently to my 
mind that I could have entered into such an arrangement if I had been 
willing to violate the laws of the United States. 

The Chairman. What has been the general effect on the farming 
community of the introduction of Chinese labor into this State ? 

Mr. Haynie. It has been just the same as the effect on all other in- 
dustrial interests on the coast. They are quietly, steadily, perseveringiy 
driving out white labor, and destroying the industrial interests on the 
coast. They are doing it so assiduously, so quietly, and so persever- 
ingiy that you hardly perceive it. And yet you find that the evil grows 
and grows, till, in proportion as Chinese industry and machanical skill 
and genius are brought to bear, w T e are driven to the wall, and cannot 
possibly compete with the Chinese. Now in regard to this secret tri- 
bunal. You heard from the Eev. Dr. Gibson that he knows nothing 
about it. I do not know that I have heard any gentlemen testify in re- 
gard to that secret tribunal for trying persons complained of in their 
own societies. During the fall of"l874, 1875, or 1876 I thought I would 



DEPRESSION IN LABOR AND BUSINESS. 361 

test this question, to see if the Chinese had any secret tribunals. My 
Chinese cook had a silver watch (they are very fond of watches), which he 
hung in his cook-house so as to know the time to prepare the meals for 
the white men whom I had employed in the hop culture. A gang of 
Chinamen came along one day wanting to buy some wood that 1 owned. 
I told them that they might go by the cook-house and get an ax. But. 
before they got there I ran around and hid the watch, and the men 
passed out with the ax to the timber. Pretty soon the cook ran up to 
me and said, " Them Chinamen stole my watch." "Well," said I, u when 
they come back, go for them." He did go for them, and searched them 
for the watch, looking for it even in their boots. TThile they were palav- 
vering in regard to the watch I stole around to the cook-house again and 
hung up the watch in its place. After a while I said to the cook, " Maybe 
you have not lost the watch at all." He said, u Yes, I know it is gone." 
Finally they all went to the cook-house and found the watch there. 
Then these three or four Chinamen denounced the cook, and went into 
town and complained to the secret Chinese tribunal, and the tribunal 
issued a summons for my cook to appear before it, and he was forced to 
appear and was fined 830. 

Mr. Martin. Did an officer come around with a warrant ? 

Mr. Haynie. No ; simply a Chinese delegation from this secret tribu- 
nal came and took him away. When he came back he told me that he 
had had a trial, and that, for the false accusation that he made, he was 
to pay a fine of 830, or to receive so many lashes. I said that I would 
get him out of the scrape, but I had to pay 810 tor him. There is posi- 
tive evidence that they have these secret tribunals, and that they are a> 
law unto themselves. 

Mr. Martin. To whom did you pay the 810 ? 

Mr. Haynie. 1 gave it to the cook. I went into town with him and 
he gave it to one of the head men. I told this head man how the thing 
occurred — that it was only a prank played on the cook : but he would 
not let him off till I paid'the 810. 

The Chairman. Did that money go to the six companies? 

Mr. Haynie. Of course I did not get into the secret inwardness of 
the thing, but I know that the cook was very much frightened, and said 
that they would kill him. 

The Chairman. Are you still residing in the country ? 

Mr. Haynie. No; I sold out my farm last fall, and I am now living 
in Sacramento City. But I have been interested in this subject since 
1844, when I became acquainted with Chinamen, and, like all other peo- 
ple, here I have felt that this is the great question of the age. It is one 
of vast importance. Its proportions can be scarcely overestimated by 
Congress. 

The Chairman. In your reflections on the subject, have you ever come 
to a fixed opinion as to what ought to be done ? 

Mr, Haynie. Yes. 

The Chairman. What is it? 

Mr. Haynie. My opinion is that there ought to be an immediate ac- 
tion on the part ot Congress, either to restrict Chinese immigration or 
to prohibit it entirely, even though the Burlingame treaty may have to 
be completely abrogated. The Chinese government can do the same 
thing, and abrogate its part of the treaty as well. 

The Chair3IAN. Do you base that judgment on the idea that the pub- 
lic safety requires it ? 

Mr. Haynie. I base it on the idea that public emergencies and neces- 
sities and regard for the life of this city and State, and of the national 



M2 DEPRESSION IN LABOR AND BUSINESS. 

government itself, require it. If such a remedy is not resorted to, the 
Chinese will in time absorb us just as sure as there is a God in heaven. 

The Chairman. Have you an idea that this Chinese invasion would 
cross the mountains and affect the Middle and Eastern States 1 

Mr. Haynie. In time it would. China is an old nation, and with the 
China people one hundred years is but a small period of time. They 
will wait their time. They are not in a hurry. We and our children 
and our grandchildren may be all dead ; but, if no check is put on the 
Chinese, the time will come when they will absorb this whole continent. 

The Chairman. And drown out our civilization and religion ? 

Mr. Haynie. Yes j if they are allowed to do so. 

Views of Mr. James Gilroy. 

Mr. James Gilroy came before the committee. He said: " I lived in 
China for ten years. One day, in 1862, I was going from my residence 
at Niugpo to the English consulate, and on my way to the consulate I 
had to pass the missionary church. I saw a great concourse of people 
in the church, and I thought I would stop and see what the matter was. 
So I told the chairmen to stop and I went into the church. I had gone 
to China young, and I had grown up in that country, so that I kuew all 
the people, and used to affiliate with them, as it were. I went to one of 
the Chinamen in the church and asked him, in the Chinese language, 
what he was d,oing there. He put his hand in his pocket and showed 
me so much money which he had got for coming to church. I asked 
another fellow what brought him there, and he also said that he had 
been paid for it. I asked several the same question, and they all showed 
me the money which they had got — 10 cash, that is one cent. I thought 
to myself, what is the meaning of this % Because there is no such thing 
as converting Chinamen; and I thought that I would make still further 
inquiries. I did so, and I found that the home mission had sent out in- 
spectors from England to see how the missions in China were doing; 
and the consequence was this large congregation of Chinamen in the 
church. The next day I went up at the same time, and there they were 
having their usual church meeting with only the ordinary attendance ; 
and I was conviuced that the thing was a farce, and that this large con- 
gregation of Chinese on the preceding day had been got together to 
fool the inspectors who had been sent out from England. 

The Chairman. Do the missionaries in China require, as part of 
Christian conversion, the cutting off of the Chinaman's queue? 

Mr. Gilroy. No, sir. The missionaries never ask for such a thing. 
The people of America do not understand the queue question. There 
are two classes of people in China — the rebels and those who are now 
called the imperial people. The rebels do not wear the queue. They 
wear their hair the same as we do. Now, if you are a loyal Chinaman, 
you must have a tail. If you appear on the streets in some parts of 
China without a tail, the authorities take you up as a spy. Consequently 
the weariug of tails has nothing to do with religion, but is only a mark 
of loyalty. That is the true meaning of it. The Chinese people proper 
(that is, the rebels) are those whose women do not have small feet and 
whose men do not wear queues. 

The Chairman. Are they numerous % 

Mr. Gilroy. They are very numerous. I traveled all over the coun- 
try, and particularly in that portion of it which is controlled by the rebels. 
These are the real Chinese. If we had them here instead of those wo 
have, we would do better with them 



DEPRESSION IN LABOR AND BUSINESS. 363 

The Chairman. Why are they called rebels ? 

Mr. Gilroy. Because they threw off the control of the imperial gov- 
ernment two hundred or three hundred years ago. 

The Chairman. Who paid those Chinese beggars for going to the 
mission church f m 

Mr. Gilroy. The missionaries — Mr. Gibson and his crowd. 

The Chairman. Was Mr. Gibson there at that time % 

Mr. Gilroy. I think that Mr. Gibson was at Ningpo that same year. 

Mr. Dickey. What object did the missionaries have in paying those 
beggars in China to come to their church ? 

Mr. Gilroy. The object was in order to keep up large contributions 
from America and England to support the missionaries, and to enable them 
to drink champagne, which I have seen them do. I was in the mer- 
chant service in China. The missionaries in China have gone in be- 
tween the merchant and his ordinary business. In those days China 
was like California in the facilities which it afforded for making money. 
California merchants used to ship goods to China and sell them at a large 
profit. But what did the missionaries do! The missionaries came in 
and said to the Chinese "Yon need not pay so much money for those 
goods. We will send to England for invoices for you." And they went 
so far as to import all kinds of merchandise from England, and thus de- 
prived us of our business; and to-day Chinese merchants have the con- 
trol of the mercantile business in China. 

The Chairman. Have the missionaries more control over the rebels 
in China than they have over the imperialists ? 

Mr. Gilroy. O, no ; they do not go near the rebel country. The 
missionaries stay in the fine cities of China. I lived in Amoy, in the 
south of China, in 1866. In China gambling-houses are more frequent 
than drinking saloons are here. I went into a gambling-house in Amoy. 
They have got several card games, and they have that game of Tan 
which is in use here. I used to play Tan myself, for I was young at the 
time. One day I stood watching the game in a gambling-house in 
Amoy. To the right of this gambling-saloon there were bars put up. I 
thought to m j self "What is that," and I looked in and I saw a lotWff 
fellows there. I recognized one of their faces, and I asked the man what 
he was doing there. He said that he had been gambling, and that he 
had lost, and that the consequence was that he had to go to California 
or Peru. "But, said he, "if you pay up $20 for me I will promise to work 
$200 worth for you."' I watched that business. I went up town and 
spoke to a merchant about it. He said "Do you not understand it! I 
will tell. you how it is. They have a sign up there in the gambling-sa- 
loon that any one who wants to try his luck at the game to the amount 
of $20 will get the money paid down; but if he loses he goes into this 
corral to be shipped to California or Peru. If he has a friend who will 
pay the money to release him it is all right, but if he cannot get released 
there is the cooly ship in the harbor. He gets a blue shirt and a pair 
of blue pants and is put on board and shipped for five years to one of 
the six companies." The Chinese are a people who never go back on 
what they say. In a city of this size in China (which would be a very 
small city there) the mayor has full control. If he is a popular man he 
administers affairs to suit himself and the people submit to him. If he 
is not a popular man he is beheaded and his head is stuck on a pole. 
There is the trouble in that country. They have no organization or 
system of government the same as we have. They have cliques which 
have power all through China, except as to the national government. 
Every one pays tribute to the Chinese Government. That is all that is 



364 DEPRESSION IN LABOR AND BUSINESS. 

necessary. Mr. Burlingame bought his way through to the Emperor* 
He was hand in hand with the California ring, and I told them in China 
when that Burlingame treaty was made what the thing was coming to, 
I said ■•' The Chinese will go to America and will shove out the American 
people. They will make their clothes, and do everything for them.' ? 
They laughed at me when I said so, but I reckon that some of those old 
men in China remember now what I then told them. Mr. Burliugaine, 
as I understood, bought his way through to the Emperor. It costs a 
man more money to get to the Emperor of China than it does to fit out 
an expedition to the North Pole. It is all done by money, and if a man 
says there was no money in it he does not know what China is. Mr. 
Burlingame bought this servant and that servant in order to reach the 
Emperor's presence and get that treaty signed. This Chinese trouble has. 
got to be stopped, or this country will go into revolution. The working- 
man who thinks that the Chinamen here will not fight is mistaken. These 
Chinese are to-day preparing for the conflict. They have more facilities 
in their power to-day than the white men have. The Chinamen have 
been laying in a supply of arms for some years past. 

The Chairman. What kind of arms? 
TMr. Gilroy. Ail kinds of arms, but their principal weapon is a knife, 
there may be half a dozen men with pistols in a room, but one China- 
man with a knife will clear out the room, because he understands the 
business. Nine men out of ten using a pistol will shoot too high or too 
low; but a Chinaman when he takes a kuife is going to do some busi- 
ness. He means it. President Hayes vetoed the anti-Chinese bill some- 
time ago. Why did he do it? Because the great American commerce 
with China must be protected. Let me tell President Hayes that the 
English Queen has been protecting American commerce in China for 
the last twenty-five years, and that if it was not for the English gun- 
boats protecting American residents there, the American residents would 
have been driven out long ago. If yon show a Chinaman in China a 
pass signed by the American minister he will pay no attention to it; 
but if you have a pass signed by the English minister you cau travel 
all through the interior of China. 

The Chairman. I thought that under the Burlingame treaty we were 
entitled to all the privileges of the most favored nation. 

Mr. Gilroy. So we were. But take Shanghai, the leading port in 
China; that city has boundaries within which Americans have to live, 
and Englishmen have to live, and beyond tliose boundaries the taotai, 
or governor, has jurisdiction. Your cousul and your plenipotentiary in 
China will tell you that if after a certain hour at night you are beyond 
these boundaries you are there at your own risk. If you want to go 
to the tea district to buy tea, you wili be told that you have gone be- 
yond your boundaries, and that, of course, whatever happens to you 
the Chinese Government will not be responsible for you. But if you will 
go to the English consul he will give you a pass, and then you are safe, 
I have seen Americans carried about in cages in China. I was one of a 
party in Amoy who got up a mass meeting and went to the American 
consul demanding that he should have one of those men liberated. He 
said that he would attend to it to-morrow, but when to-morrow came 
that man in the cage was in the interior of China. It seems that he had 
been engaged in the rebellion. If that man had been an English sub- 
ject, his treatment would have cost the Chinese Government a heap of 
money. I do not wish this committee to suppose that I have any ani- 
mosity against the Chinese. I have spent the best part of my days in 
China. It is a lovely country. But I must say that the coolies of China 



DEPRESSION IN LABOR AND BUSINESS. 365 

who are here are beyond all toleration. They are the lowest of the low. 
There is hardly a Chinaman on the coast who is not a murderer or a 
thief, or some other criminal, or who has not sold himself to come to 
this country. I have received as much hospitality in China from the 
Chinese proper as I have received in America. But the class of coolies 
who come here are not Chinese. The Chinese proper are paid high 
wages ; but the coolies, such as you have here, are paid only from 6 cents 
to 7 cents a day. If you burst up the six Chinese companies, you will 
burst up the whole Chinese arrangement. 

The sittings of the committee in San Francisco were here closed. 



TESTIMONY TAKEN AT DE3 MOINES, IOWA. 

CONTRACTION OF THE CURRENCY. 

Des Moines, Iowa, September 2, 1879. 
The committee met in the public room of the hotel. Present, the 
chairman (Mr. Wright, of Pa.), and Messrs. Dickey, of Ohio; O'Connor, 
of South Carolina, and Martin, of North Carolina. 

Statement of Mr. Stephen Ford. 

Mr. Stephen Ford came before the committee and submitted the 
following paper as the result of a partial investigation of the increase 
of debt and taxes in a small section of the State of Iowa : 

Fayette County, Iowa : The number of 10 per cent, chattel mortgages 
placed upon record during the years 1865-'66 was 334; 1867-68, was 
504 ; 1869-70, was 850 ; 1871-72, was 1,104; 1873-74, was 1,485; 1875- 
'76, was 2,065 ; 1877-78, was 3,367. 

The foregoing is extracted from the records of said county. 

Fayette is an agricultural county, and its increase of population has 
been no greater than in other portions of the State. 

Statement of the taxes of Polk County, Iowa, in which is situated 
Des Moines, the capital of the State: 1869,132,054.99; 1875,$34S,228.34; 
1878, $447,878.49 ; shrinkage in value during above time equal to 50 
per cent. 

Taxes of Madison County, of which Winterset is the county-seat : 
1873, $97,494.36; 1878, $1.5,966.07. 

Showing that while all products have constantly decreased in value, 
debts and taxes have constantly increased. 

Statement of Mr. George M. Walker. 

Mr. George M. Walker came before the committee, at its invita- 
tion. He stated, in reply to preliminary questious, that he resides at 
Des Moines and has resided here since 1866, and at present occupies 
the position of State treasurer. 

The Chairman. What is the financial condition of this city, so far as 
you understand % Is there a depression of business and labor here ; and, 
if so, to what extent ¥ 

Mr. Walker. There is great depression in labor and in business of 
all kinds. 

The Chairman. How long has it been so ! 



366 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Walker. There has been a depression since 1872. 

The Chairman. Has that decline been continuous since 1872 ? 

Mr. Walker. Yes, sir. 

The Chairman. What is the condition of the farming community 
throughout this State ? 

Mr. Walker. The farming interest is depressed. 

The Chairman. What is the condition of the farming interest in re- 
lation to indebtedness! 

Mr. Walker. As a class the farmers are in debt and most of them 
are cramped. Since 1872 it has been growing worse. Their indebted- 
ness consists of mortgages on their real estate, and, in many cases, on 
their chattels. From the best information, I should think that from one- 
third to one-half of the farmers are indebted, and have mortgages on their 
chattels and real estate. I gather this from general talk with parties 
from different portions of the State, and from information derived from 
newspapers. 

The Chairman. Is that indebtedness a thing that the farmers are 
going to get rid of without the loss of their property ? 

Mr. Walker. Many of them will not. Last fall many of our farmers 
moved off, leaving their property here, to seek homes farther west. They 
had become discouraged, their farms being heavily mortgaged, and they 
went off to start again in a new country. They became discouraged, 
thinking that they could not pay off their indebtedness, and they left 
their lands here. I presume that one-half of those whose farms are 
mortgaged will ultimately lose their property unless their financial con- 
dition is changed for the better. That is according to my best informa- 
tion. The chattel mortgages on the recorder's books are increasing 
instead of decreasing. Likewise, the mortgages on real estate are in- 
creasing instead of decreasing. Last fall, while in a bank making de- 
posits, I was speaking to the banker as to the financial condition of the 
State, and speaking of the good crop, and the banker said, "It will take 
this crop and another one just as good to liquidate the small debts and 
the interest on the mortgages in this country, and the farmers will still 
have their mortgages unpaid." 

The Chairman. Is that also your opinion and judgment 1 ? 

Mr. Walker. It is. 

The Chairman. You estimate that one-half of the farm in this State 
are mortgaged % 

Mr. Walker. From one- third to one-half. 

The Chairman. And you think that at least one-half will be lost to 
the present owners'? 

Mr. Walker. Yes ; unless the financial condition is improved. 

The Chairman. Do you give us to understand that this depression 
in business and labor is general throughout the State 1 

Mr. Walker. Yes, sir; we are as prosperous here at the capital as 
they are probably in any portion of the State. 

The Chairman. What, in your judgment, has caused this depression 
of business and labor in the State % 

Mr. Walker. The contraction of the currency. 

The Chairman. You have not currency enough to meet the require- 
ments of business % 

Mr. Walker. No, sir. 

The Chairman. What remedy would you suggest for this state of 
things? 

Mr. Walker. An increase in the circulating medium. 

The Chairman. What is the rate of interest here f 



DEPRESSION IN LABOR AND BUSINESS. 3G7 

Mr. Walker. Ten per cent. 

The Chairman. Can farmers who have mortgages on their property 
procure money here for agricultural purposes "I 

Mr. Walker. I think not, unless they have ample additional security 
to offer. 

The Chairman; What is the price of corn and wheat in this market? 

Mr. Walker. I am not able to say. Last year corn sold from 15 
cents to 20 cents a bushel, and wheat from 50 cents to 70 cents. 

The Chairman. Have the prices increased any this year ? 

Mr. Walker. I do not know how they are at the present time. They 
had not increased a month ago, but were a little lower than they were 
last year at the same time. 

The Chairman. What is the price of labor here ? 

Mr. Walker. City labor is worth from •$! to $1.25 a day, the laborer 
finding himself. 

The Chairman. Is there employment for all the laborers in the city? 

Mr. W t alker. Not at the present time, and there has not been. 

The Chairman, Is there a large number out of employment — men 
who are willing to work if they could get work ? 

Mr. Walker. There are not so many out of work this fall as there 
were last fall. 

The Chairman. How is your taxation here — is it increasing or de- 
creasing ? 

Mr. Walker. It has been on the increase till this present year, and 
the levy for this year has not been made yet. I presume it will be 
smaller this year than last. The rate of taxation in the city here is 
about 5 per cent. 

The Chairman. How is real estate here ? Is there any shrinkage 
in its value? 

Mr. Walker. Eeal estate has been going down since 1873. 

The Chairman. Is it still going down i 

Mr. Walker. There is not much sale for property, but I think not, 
There is no demand for property. 

The Chairman. Does that want of demand arise from the scarcity 
of money? 

Mr. Wtalker. That is my judgment. 

The Chairman. W r hat is your city debt ? 

Mr. Walker, Our city debt is $585,000. 

The Chairman. Then I understand that you give it as your opinion 
that the industries of the city and the labor in the State are much de- 
pressed ? 

Mr. Walker. Yes, sir; and they have been since 1873. 

The Chairman. Do you feel the want of money arising from the con- 
traction of the currency % 

Mr. Walker. Yes, sir. 

The Chairman. How is it in regard to the prices of stock — cattle 
and hogs — they being a large product of the State ! . 

Mr. Walker. I cannot give you an intelligent answer to that ques- 
tion. 

Mr. O'Conner. How were things here prior to 1873 ? 

Mr. Walker. They were in a flourishing condition. There was 
great demand for real estate. There was a good deal of building and 
there was a great rush of business. 

Mr. O'Conner. Then, a state of active prosperity had existed from 
the close of the war till 1873, when the decline set in ? 

Mr. Walker. Yes, sir. 



368 DEPRESSION IN LABOR AND BUSINESS. 

Mr. O'Connor. Has this decline had a tendency to check immigration 
to tbe State ? 

Mr. Walker. The immigration which used to come to this State now 
passes on to Nebraska and Kansas, where the immigrants can take 
homesteads. Prior to that time a good class of immigrants came here 
and purchased improved property. 

Mr. O'Connor. And such immigrants are now deterred by the high 
rate of taxation'! 

Mr. Walker. I do not know that that is the cause. In cities that 
may be one of the reasons, bat as far as the rural portion of the State 
is concerned, I cauuot say that it is. Tbe 5 per cent, taxation that I 
spoke of is in this city. The taxation on country property is not so 
high. Undoubtedly the high rate of taxation has some effect in turning 
away immigrants. So also has the lack of means to purchase property. 
Men know that in the present financial condition of the country they 
cannot make money to purchase as they used to 5 therefore, they go 
West, where they can squat on land, and grownup with the country. 

Mr. O'Connor. In what period was the greatest increase in the pop- 
ulation of your State % 

Mr. Walker. From 1866 to 1876, although the tide of immigration 
probably turned in 1873. 

Mr. O'Connor. The immigration set in after the war ? 

Mr. Walker. Yes. 

Mr. O'Connor. It kept increasing up to 1872 and 1873 ? 

Mr. Walker. Yes. 

Mr. O'Connor. Can you state, as an official of this city, what was 
the rate of increase in population between 1865 and 1873 % 

Mr. Walker. I took the census of this city in 1869, and my recol- 
lection is that it was then from 18,000 to 20,000. It is now about 
25,000. The population in 1865 was 13,000. 

Mr. O'Connor. What is the banking condition of the city % 

Mr Walker. I canuot answer that question. We have six banks 
here: the Citizens' National Bank, with a capital of $100,000, and the 
Iowa bank, with a capital of $100,000. The rest of the banks are private 
banks. 

Mr. O'Connor. Then you have only $200,000 of national-bank cap- 
ital? 

Mr. Walker. That is all. A bank across the river failed a couple 
of years ago, and a new bank was organized in place of it, but whether 
the new bank is a national bank or not I cannot say. 

Mr. O'Connor. Is money easy or tight here? 

Mr. Walker. Money has been easy at certain rates of interest. 

Mr. O'Connor. At high rates of interest? 

Mr. Walker. Yes; 10 per cent. 

Mr. O'Connor. Then money is very scarce at a reasonable rate of 
interest ? 

Mr. Walker. Yes. 

The Chairman. Do the national banks charge 10 per cent. % 

Mr. Walker. Yes; they discount at 10 per cent. The legal rate of 
interest here is 10 per cent, if mentioned in the contract; otherwise it is 
but 6 per ceut. Ten per cent, is allowed if specified, but not beyond 10 
per cent. 

The Chairman. Then 6 per cent, is the legal rate of interest % 

Mr. Walker. No; 10 per cent, is legal, but if there is no mention 
of the rate of interest in the note or contract, it draws but 6 per cent. 



DEPRESSION IN LABOR AND BUSINESS. 369 

Mr. O'Connor. Is there any statutory enactment fixing the rate of 
interest in tuis State ? 

Mr. Walker. My understanding is that 10 per cent, is the interest in 
Iowa. All notes here are drawn up at 10 per cent. That is what we 
call legal interest, but if no rate is specified in the note, all that the 
creditor can collect by law is 6 per cent. 

Mr. O'Connor. Then 6 per cent, is the legal rate of interest, with per- 
mission to charge 10 per cent. ? 

Mr. Walker. Perhaps so. 

Mr. Dickey. What proportion of the tax of this city is now paid as 
compared with 1870 and 1871 ? In other words, is the amount of prop- 
erty now offered for sale for unpaid taxes greater in proportion to the 
amount taxable than it was in 1870 and 1871 ? 

Mr. Walker. I think not. 

Mr. Dickey. Then the people pay their taxes now as readily as they 
did in 1870 J 

Mr. Walker. Yes ; because that is their last hope. 

Mr. Dickey. What is the result in case of a failure to pay taxes here ? 

Mr. Walker. The tax becomes delinquent on the 1st of March, and 
has 1 per cent, added to it. The uext month 2 per cent, is added, and 
so on till it gets to be 6 per cent, penalty. Then on the 1st of October 
the property is sold for delinquent taxes. An old law (which was 
changed by the last legislature) fixes the limit at 30 per cent, penalty. 
Now it is 20 per cent. 

Mr. Dickey. Then the amount of property offered now for sale for 
taxes is no greater than it was in 1869 and 1870 ? 

Mr. Walker. I think not. Those who are able to pay their taxes 
pay them, and those who are not able trust to Providence. If they can- 
not pay them at the time they are due, the property generally goes to 
sale, and is gobbled up by the tax-buyers. I have been treasurer of 
this city since 1865. The county treasurer collects all the taxes for the 
county, and at the close of every month he pays over to the incorpor- 
ated towns the amount due to them. In 1873 I received on the 1st of 
March about $10,000 of taxes that were apportioned to this city. • The 
next year I did not receive quite so much ; the next year I received 
about* 850,000 : and this last year I received about $60*,000. The bulk 
of the taxes are collected in February, March, April, and May. We 
were able to sink our city debt a little this year, i had been in hopes, 
from appearances, that we would sink it about $30,000 ; but I think it 
will not exceed $20,000. I have paid out about $22,000 for outstanding 
bonds within the last two or three months ; but there are some addi- 
tional expenses that will have to be added on account of our State fair — 
it having cost $7,000 to fix up a fair road — so that I do not think that 
my hopes will be realized in regard to sinking the debt in the present 
year. Last year my annual report showed a city debt of $606,000. It 
is now about $585,000. It is all in bonded form. Our floating debt is 
virtually nothing. We issued bonds last year and took up our floating 
debt to the amount of $175,000. On these bonds, which bear 7 per cent., 
we realized par. 

Mr. Martin. How is it that the farmers here are so heavily mort- 
gaged ? 

Mr. Walker. They got in debt in the ordinary way. These debts 
have been incurred by investing in machinery, by improvements on 
their farms, and by ordinary store debts. The farmers have expected 
to do better every year, but their expectations have fallen short ; and 
then they find themselves in debt. Then the parties to whom they are 
H. Mis. 5 24 



370 I'EPRESSION IN LABOR AND BUSINESS. 

indebted want their money and the farmers are compelled to raise 
money on their farms. Many of them have got iu debt by adding ad- 
ditional acres to their farms and by buying farm machinery. 

Mr. Martin. When was the bulk of this debt contracted ? 

Mr. Walker, From 1870 to 1875. 

Mr. Martin. Are there any new mortgages being recorded now ? 

Mr. Walker. Yes. 

Mr. Martin. W T hat are the mortgages given for? 

Mr. Walker. To tide over indebtedness which has been accumulating. 

Mr. Dickey. What proportion of these mortgages is for the purchase 
money of lands ? 

Mr. Walker. I cannot answer that Question, but a good many of 
them are. 

Mr. Martin. When a merchant supplies a farmer with ordinary farm 
supplies, does the farmer give a mortgage on his chattels to secure that 
debt? 

Mr. Walker. That is not common iu this country. 

Mr. Martin. Bat when these advauces are made to a farmer by a 
merchant, does the farmer secure the merchant by mortgaging his crop 
or stock or land ? 

Mr. Walker. Yes. 

Mr. Martin. When he has not good credit the merchant requires 
security ? 

Mr. Walker. Yes. 

Mr. Martin. Is that a frequent occurrence ? 

Mr. Walker. It is not usual. 

Mr. Martin. But is it not frequently resorted to by the merchant in 
order to secure his debt? 

Mr. Walker. Yes, but our merchandizing and East merchandizing 
are different. If a man cannot pay his debts he cannot get credit. 

Mr. Martin. If a farmer is involved and cannot get credit and wants 
supplies, he has to secure the merchant by giving a lien on something f 

Mr. Walker. Yes. I was up to the court house to-day. The recorder 
was out, aud I asked his clerk relative to mortgages — whether they were 
increasing or decreasing. The clerk said that they were increasing, 
particularly chattel mortgages. 

Mr. Martin. What is the cause of this increase ? 

Mr. Walker. To tide over, in the hopes that the farmer will be able 
to meet his debt. 

Mr. Dickey. You mean by tiding over that the debtor is unable to 
pay at present, and that he borrows money to pay an old debt, and 
gives a new mortgage on his property ? 

Mr. Walker. Yes; thinking that with his new crop he will be able 
to pay up his debt and to save his home or his chattels. 

Mr. Dickey. But every time the farmers tide over in this way they 
increase their debt, do they not ? 

Mr. Walker. Yes. 

Mr. Martin. You say that the remedy you would suggest is an in- 
crease in the circulating medium ? 

Mr. Walker. Yes, sir; most emphatically. 

Mr. Martin. Therefore you would recommend Congress to pass a law 
increasing the circulation ? 

Mr. Walker. Yes. 

Mr. Martin. To what extent would you increase it ? How much more 
money would you have in circulation than you have now? 

Mr! Walker. I would have the bank currency withdrawn, and legal- 



DEPRESSION IN LABOR AND BUSINESS. 371 

tender money issued instead of it. 1 would have 8300,000.000 of legal- 
tender money in circulation. 

Mr. Martin. Would that increased circulation be of any benefit to 
people who have their lands mortgaged, unless they had something to 
get the money w ith I 

Mr. Walker. Money is governed by the same law as all other com- 
modities; and when the supply is great the deuiaud is less, and vice 
versa. 

Mr. Martin. But would that increased circulation help poor farmers 
in Iowa, who have their lands mortgaged, unless they had something to 
sell in order to obtain the money ? 

Mr. Walker. I think it would. We have got something to sell here. 
We have our energy, our labor, and our property to sell. That mort- 
gaged property would bring more buyers. There would be a greater 
demand for it. 

Mr. Martin. Tour idea is that an increase of the currency would 
relieve you ? 

Mr. Walker. Yes. It would raise the price of property and labor. 

Mr. Martin. You think that there is not money enough now in cir- 
culation to meet the wants of the people ! 

Mr. Walker. I do. 

Mr. Martin. And you think that that demand could be supplied by 
the issue of $400,000,000 more of legal-tender notes? 

Mr. Walker. By withdrawing the national-bank currency and issuing 
$400,000,000 of legal-tender notes in place of it. 

Mr. Martin. Do you not call the national-bank money circulation ? 

Mr. Walker. Yes ; 8326,000,000. But under the banking law the 
banks have to keep a reserve in greenbacks. 

Mr. Martin. Would you retire that $32(5,000,000 of bank circulation 
and substitute legal-tender notes for it. 

Mr. Walker. Y~es. 

Mr. Martin. And issue 8400,000,000 besides ? 

Mr. Walker. Xo, sir. I would issue $400,000,000 of greenbacks 
instead of bank currency, which would make 8800,000,000 altogether. 
That would satisfy the demand. 

Mr. Dickey. That would release the reserve fund which is now kept 
by the national banks and increase the circulation to that extent J ? 

Mr. Walker. Yes. Keally, under the present law, we have not over 
$500,000,000 in circulation. If we had the entire amount in circulation, 
including gold and silver, and if all that was in service and not locked 
up, we would have 8900.000,000 or $1,000,000,000 in circulation. If we 
had 81,000,000,000 of circulating medium all out and doing business 
and not locked up, it would make a great difference. 

Statement of Mr. Owen Brownley. 

Mr. Owen Brownley came before the committee. In reply to pre- 
liminary questions, he stated that he resides at Des Moines ; that he is 
a laboring man ; that be has worked in the coal mines of Pennsylvania 
and Iowa, and that now he is employed at laboring work in the city. 

The Chairman. What is the condition of labor here. 

Mr. Brownley. I think that, at the present time, it is in a better 
condition than it was a year ago. I think it is improving. For the last 
four or five years it has been depressed, and especially in the coal busi- 
ness. 

The Chairman. What is the cause of the depression I 



372 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Brownley. The cause of the depression among coal-inen is that 
there is not sufficient demand for coal. 

The Chairman. Is the coal-market improving ? 

Mr. Brownley. It improves in some part or other of the State as 
the population increases. 

The Chairman. What is the price of farm-labor % 

Mr. Brownley. I understand that a farm-laborer receives $14 to $20 
a month, with board — not for the whole year, but during cropping sea- 
sons. 

The Chairman. What is the price of labor at any other season 1 

Mr. Brownley. In the winter time labor can only be had about Des 
Moines and where there are coal-mines. 

The Chairman. On the whole, you think that labor is improving from 
its former condition of depression ? 

Mr. Brownley. There are not so many men out of work now as 
there were this time last year. One reason of that is, that there is a 
railroad being built here, which is employing a number of men. 

The, Chairman. Is there any considerable number of men seeking 
employment and unable to secure it- 
Mr. Brownley. I do not think there are any men in this city who 
want work and cannot find it at some place or other in the county. 
There are quite a large number of men employed in the coal-mines ; 
but when the days become warm, and there is not so much coal required, 
there are not so many employed. Still there is always a possibility for 
men to get work at something else. 

The Chairman. Are you out of employment now ? ■ 

Mr. Brownley. Just at present I am, because I am not able to work. 
I have been sick. I believe, however, that I could find employment if 
I looked for it and wanted it badly. 

The Chairman. How is the farming business in this State ? Is it 
prosperous ! 

Mr. Brownley. I think it is, so far as those people are concerned 
who are out of debt. I believe that the farmers out of debt, takinginto 
consideration the price at which farm produce is sold and the pur- 
chasing price of money, are well off at the present time. 

The Chairman. How is it as to the farmers who are in debt ? 

Mr. Brownley. Of course it is worse for them. It is always awk- 
ward for a man who is in debt. I commenced coal-mining in Wales 
when about nine years of age, and I have followed it most of my life- 
time since. I came to this country in 1852, and since then I have fol- 
lowed coal-mining about twenty years. I was in the Army part of the 
time and I was on a farm for some time. 

The sitting of the committee at Des Moines was here closed. 



TESTIMONY TAKEN AT NEW YORK. 

New York, October 28, 1879. 
The committee met in a room of the New Y r ork Hotel. Present, the 
chairman. 

Vieics of Mr. Peter Cooper. 

Mr. Peter Cooper appeared before the committee on its invitation. 
The Chairman. The House of Representatives of the Forty- fifth Con- 
gress appointed a committee to inquire into the causes of the depression 



DEPRESSION IN LABOR AND BUSINESS. o73 

in the industries of the country, as well as into the depression in labor. 
That committee pursued its investigations, and in the Forty-sixth Con- 
gress the committee was renewed. Our instructions are to inquire into 
the causes which have produced the depression in labor and industry — 
not as to whether that depression exists now, but (admitted as it is on 
all hands that the time has been when it did exist to a great extent) we 
want to get at the facts that caused it. That is the general inquiry 
which we wish to put to you. In the first place state your age and 
residence. 

Mr. Cooper. I reside in the city of Xew York, and I shall fiuish my 
eighty-ninth year on the 12th of February next. 

The Chairman. How long have you resided in Xew York ? 

Mr. Cooper. I was born here, and my whole life has been spent here 
in New York. 

The Chairman. What has been your occupation and business during 
that long period ? 

Mr. Cooper. My business during the war with Euglaud in 1812, and 
just before that war, was the manufacture of machines for shearing 
cloth. I had learned three trades before that. My father being a hat- 
ter, I learned that trade. Then I served three years at the brewing 
business and three years at coach-making. Then I went to work to 
make machines for shearing cloth. 1 worked for three years at that, at 
$1.50 a day. I bought the patent right of the machine, and I went to 
work on my own hook. I was in business at the beginning of the war with 
England, and I worked through the war. After the war was over I could 
not sell another machine. Then I kept a grocery store. I bought prop- 
erty where the Bible House stands, and built four houses on it. Then 
I bought a glue-factory, and I kept that going for fifty years — till seven 
or eight years ago. I bought the Camden Iron Works in Baltimore. 
Then I bought iron works on Twenty-third street in this city. Theu I 
bought the Trenton Iron Works and a second rolling-mill at Trenton. 
Then I bought three blast-furnaces at Phillipsburg, the largest in the 
country. I sold them, and then I bought two more in Pennsylvania and 
Maryland. Then I bought a place called Bingwood, containing 11,000 
acres of land, and I built two furnaces there. One was running, the 
other was not. I have now turned over all my business to my children. 

The Chairman. Give us, in a connected form, your ideas with refer- 
ence to what has caused our past disasters in trade and industry. 

Mr. Cooper. I will begin by saying that our great national ship of 
state somewhat resembles a vessel which has been driven, by force of 
storms and winds, into an unknown sea. The master of such a vessel, 
if wise and intelligent, would seize the first moment of calm to examine 
his charts, make up his reckoning, find out where he was, and how he 
could escape from his danger. We have been so driven by wars, com- 
mencing with the Bevolutionary war, and we must try to fiud out where 
we are, and where our mistakes have been. Our fathers who signed the 
Declaration of Independence and framed the Constitution of the United 
States (which grew out of it), framed for us a constitution and code of 
laws, and based that constitution and code of laws on the eternal prin- 
ciples of truth and justice. When they said, u We, the people, in order 
to establish justice," &c., they meant what they said. They saw that 
that was the only possible way that they could make themselves safe. 
They tried a league of States, and they found it a failure. They found, 
as Chancellor Kent said, that to depend for the carrying on of a govern- 
ment on a combination or league of States was a phantom, because, with- 
out making war on each other, the States could not be made to pay up,* 



374 DEPRESSION IN LABOR AND BUSINESS, 

So that they were driven by necessity to ask what they could " do to be 
saved." They saw that the English Government could reconquer the 
country whenever it pleased if the States did not unite ; so that they 
were driven by necessity to form a " more perfect union." That union 
they intended should secure and establish justice, as the only possible 
means by which domestic tranquillity could be secured, the general wel- 
fare promoted, and provision made for public defense. Their object was 
the promotion of the general welfare, and to secure the " blessings of 
liberty to themselves and their posterity." That beautiful preamble to 
the Constitution covered the whole field of a nation's wants ; and it 
stands, in letters of light, to be read by all men, and to be admired by 
every one who understands it. There was only one blot on that code of 
laws. After our fathers had framed this beautiful constitution, two or 
three of the States declared that they would never enter it unless a clause 
was put into it allowing them to import slaves for twenty years. They 
were then led to consider what was to be done, whether they were to 
lose the results of all their labor and sufferings, or whether they would 
trust Providence. What they then believed would take place was that 
the States generally would come to the conclusion that slavery was not 
profitable. That was before the cotton-gin was invented by Whitney, 
and when the cottonseeds had to be picked by hand, a labor that was 
so great that the raising of cotton could not be pro tit able ; and it was 
hoped and believed that, on that account, slavery would die out by 
itself. The fact was that some of the States did soon afterwards abolish, 
slavery. And so our fathers, looking over the whole ground, concluded 
to trust to Providence that slavery would die out of itself. Unfortu- 
nately for our country (or fortunately), this discovery of the cotton-gin 
was made, which took the seeds out of the cotton so cheaply that the 
raising of cottou became very profitable, and gave to the planters of 
the South that power over thecountry which made them feel independent 
of every one else, because they could send their cotton to England aud 
sell it for gold. That went on and on, until the cotton growers felt their 
importance so great, and found so many advocates throughout the North 
of the system of slavery, that they demanded the right to spread it over 
the whole country, and that right the majority of the people could not 
concede to them. The people of the North tried every way to induce a 
compromise ; but, failing to succeed in getting a compromise, and seeing 
that the people of the South were preparing for a dissolution of the 
Uniou, and were claiming the right of secession aud nullification, every 
effort was made to see whether something could be done to avert 
the terrible necessity of war. While the negotiations were going on 
Sumpter was fired on. That united the people of the North. Seeing 
that they had made every effort to try and meet their Southern brethren 
half way, and bad failed in it, the whole people of the North united to de- 
fend their rights. We fought out the battle; and the end of the war left 
ns in a degree of prosperity that was previously unknown and unexpected. 
At the beginning of the war Mr. Chase said that he had $50,000,000 
of due-bills lying on his table, and not a dollar to pay them with. He 
sent for Silas M. Stillwell, a gentleman famed for having given a great 
deal of attention to the subject of finance, and he advised with Mr. Still- 
well and made him his confidant. Mr. Stillwell advised Mr. Chase to 
resort to the issu^ of paper money; but that was so repugnant to Mr. 
Chase's ideas at the time that he could not think of it. 

The Chairman. Was the issue of greenback currency Mr. Stillw T ell's 
project? 

Mr. Cooper. Yes, sir j that was Mr. Stillwell's project. I happened 



DEPRESSION IN LABOR AND BUSINESS. 375 

at that very time to present my petition recommending what should be 
done in that dilemma, and I will read a tew paragraphs from it. This 
was at the time when Mr. Chase said he had $30, 000, 000 of due-bills on 
his table, and not a dollar to pay them with. My petition bears date 
December 14, 1862. It says: 

To the honorable the Senate and House of Representatives of the United States : 

Your petitioner, in common with millions throughout our country, is now looking 
with anxious expectation, hoping that Congress will adopt a financial policy for our 
country calculated to bring all needed strength to the government and all possible 
facilities to aid the business operations of the country. 

Your petitioner desires humbly to represent that a tiuaucial policy calculated to im- 
part the greatest possible strength to the nation should embody in the forms of law all 
the wisdom that can be acquired from the history and experience of mankind. 

Your petitioner desires most respectfully to call and fix the attention of Congress on 
the unmeasured cousequences that now depend on a speedy adoption of a financial 
policy calculated to maintain the force and power of the government in its struggle for 
the nation's life, and at the same time to give the required stability and facilities to 
euable the people to carry on to the best advantage all the agricultural, mechanical, 
and commercial interests of the country. 

Your petitioner believes that every other act of legislation dwindles into insignifi- 
cance when compared with an act on which all business interests are dependant, and 
connected with the honor and life of the nation itself. 

In view of consequences and responsibilities so tremendous, your petitioner does _ 
most humbly pray that no time should be lost in perfecting laws that will embody the 
highest wisdom aud virtue of an intelligent people, for the people's benefit. 

In the opinion of your petitioner, the Constitution makes it the solemu duty of Con- 
gress to coiu mouey and regulate the value thereof of all that shall be known aud used 
as money throughout the United States. The faithful performance of this duty by the 
government will more effectually secure the rewards of labor to the hand that earns it, 
and more effectually aid all the useful industries of the country, than any and all other 
measures that can be adopted. 

All history demonstrates the fact that a proper measure of value for the property of 
a country must have in it an inherent value, or carry with it the evideuce of real prop- 
erty in labor actually done ; every other device as a measure of value must always 
give opportunity to the artful and designing to take advantage of the weak aud un- 
suspecting, and, as Webster said, will fertilize the rich man's field by the sweat of the 
poor man's brow. 

The assumed power of State legislatures to authorize local banks to issue bills of 
credic called dollars, in open violation of their Constitutional agreement, has opened a 
flood-gate of evil to the country, corrupting the legislatures and tempting the people 
into extravagance and prodigality of expenditures in their efforts to live on the bor- 
rowed promises of banks instead of their own honest industry. 

Your petitioner desires most respectfully to represent that the number of local banks 
has become so great that it has become impossible for the wisest merchant to dis- 
tinguish from the vast number of pictures called money those that are good from those 
that were never intended to be redeemed. In the opiniou of your petitioner, the amount 
of loss that has fallen upon the community should not fail to receive from the only 
power authorized by the Constitution to coin money and regulate the value thereof 
that prompt and decided action so indispensable to the security and welfare of the 
nation. Great and lasting advantages must result to the business of the country from 
the adoption by the local banks of one uniform currency, secured by the whole prop- 
erty of the States. Such a currency, when adopted throughout the country, will be- 
come familiar and easily known and understood by the people, and will, in the opiuion 
of your petitioner, prevent great losses by the people, and become one of the strongest 
bonds of union that can possibly be adopted. 

After a good deal of difficulty Congress adopted the idea. Mr. Still - 
well said to Mr. Chase that a paper currency could be made to circulate 
by making it a legal tender and by allowing a small interest ou it. He 
said that its legal-tender quality would be the force to put it in circula- 
tion aud that its interest-paying quality would be the means of keepiug 
it in circulation. That was the plan which Mr. Jefferson aud Mr. Van 
Buren had recommeuded. Mr. Chase resisted the idea. He wished to 
have the legal-tender currency made payable in coin, aud he argued the 
case so long that Mr. Stillwell got out of patience and concluded he 
could not do anything with Mr. Chase, aud came home to New York. 



376 DEPRESSION IN LABOR AND BUSINESS. 

As soon as he got here be had a telegram begging him to comeback. Mr. 
Chase then wanted him to see whether he could not make some arrange- 
ment with the hanks to furnish money to the government. Mr. Still- 
well came on and made arrangements with the banks by way of a loan ; 
but the banks wanted Mr. Chase to draw the money from them accord- 
ing as he wanted to use it instead of drawing it all in one sum and 
putting it in the sub-treasury. Mr. Chase, however, insisted that the 
money must go into the sub-treasury, and must be paid in in gold. 
That broke up the arrangement, and the government was in a terrible 
dilemma for some time. Mr. Still well came back again in despair, 
thinkiug that his usefulness was gone. He had done all that he could 
to make Mr. Chase issue legal-tender mouey baariug interest as an 
inducement to help it in circulation. That was the plan which Mr. 
Chase had to adopt at last. The banks here and in Boston took the 
precaution to make a special deposit of all the coin that thev had, and 
it only amounted to between $20,000,000 and $30,000,000. Theu, when 
Mr. Chase found that he was cut off, and that the banks would not pay 
the gold into the sub-treasury, he had to take it as he could get it. 
He took the gold which the banks gave him, and then when the banks 
wanted him to take their paper money he said, "Your credit is not so 
good as the credit of the whole country would be, and, therefore, I am 
compelled to issue paper money on the credit of the people, whose 
property it will represent." So he did ; and there is where he started. 
Mr. Stillwell says that they had this thing in controversy when my peti- 
tion was received. If the government had adhered to the plan rec- 
ommended by Thomas Jefferson (that is, to issue Treasury notes 
made receivable by the government for all forms of taxes, duties, and 
debts to the goverument) the war would have cost us only about one- 
half what it did cost us, and we would have had a currency based on 
the credit of the country. Currency is a tool of trade. In order to 
find out where we are, and how we came to be where we are, it is neces- 
sary to look at the facts just as they came about. Here was the country 
with its life trembling in the balance, depending on an experiment. 
That experiment resolved itself into an issue of Treasury notes. If I 
remember right, there were four different acts for the issue of these 
Treasury notes. The first was for an issue of $25,000,000, then for an 
issue of $30,000,000, then for an issue of $60,000,000, and then for an 
issue of $250,000,000, and the people responded to the call. That was 
before greenbacks had an existence. These were Treasury notes bear- 
ing interest and made convertible into bonds. Every time that they 
were offered in that shape there was more money offered to the govern- 
ment than was needed. That is a singular fact, showing that the people 
were determined to carry on the war, and to furnish the moneys to do 
it with. On each of these four occasions there was more money offered 
to the government than could be taken under the acts which authorized 
the loans. 

The Chairman. Did not that run the Treasury notes to a premium ? 

Mr. Cooper. 1 do not recollect the fact. Then there was an act au- 
thorizing the issue of $500,000,000 of legal-tender money ; and the 
government very foolishly, and very unconstitutionally (in my opinion) 
promised to pay what it did not possess. It promised to redeem this 
legal-tender currency in gold instead of promising (according to the re- 
quirement of the Constitution) to levy taxes, debts, assessments, im- 
ports, and excises in order to pay the debts of the country, and instead 
of receiving therefor such money as the government paid out. 



DEPRESSION IN LABOR AND BUSINESS. 377 

The Chairman. The amount of Treasury notes issued before the issue 
of legal-tender notes seems to have been about 6900,000,000. 

Mr. Cooper. Yes; as nearly as I can recollect it was over 8800,000,000. 
When it was found that this legal-tender currency circulated freely, 
and was received thankfully and gratefully by the soldier, the sailor, 
and the mechanic all over the country, and that it paid debts every- 
where, it gave a stimulus to industry, to trade, and commerce ; and the 
productions of the country increased instead of diminishing by the 
war, so that we came out of the war a richer people than we were when 
we went into it. 

The Chairman. How was the property of the country increased ! 

Mr. Cooper. By the increase of productions, and by the ability of 
the people to produce what was wanted. The building of railroads, 
canals, and houses, and everything else went on to'a degree that aston- 
ished the world. Then, at the close of the war, there were $830,000,000 
issued to pay off the soldiers. That made up nearly $2,000,000,000 of 
greenbacks that had been issued. This last issue of $830,000,000 bore 
7-1%- interest for three years. That was in order to help the soldier who 
was to receive the money, andwho had left his business and his home. It 
was in order that he might have some little help to live. The money was 
taken and used, and with it was purchased and bought and sold more 
than the value of the whole property of the country many times over 
before that money was withdrawn. Then came this terrible influence 
from abroad. We had been sufficiently warned by Sir Archibald Allison, 
who had seen England pass through a similar condition after the Na- 
poleonic wars, and after twenty-five years of successful business such 
as had never been seen in England. Mr. Pitt thought that they could 
come to specie payments by the shrinkage in values of 2J per cent. ; but 
they tried it on, and found values shrink 50 percent., and Sir Archibald 
Allison says that it brought over England a degree of wretchedness 
and ruin surpassing all the earthquakes, famines, pestilences, and wars 
that England had ever passed through. There was nothing in history 
to compare with it. Sir Archibald Allison gave the warning. He said 
he hoped that the American people would not go into the same trap 
that the English had gone into : but we deliberately weut right into it 
by the advice of English bankers, such as the Rothschilds. When 
Grant looked over the country and saw existing such a degree of pros- 
perity as had been unknown before, he said in his message to Congress 
that the greenbacks were the best currency that our country ever pos- 
sessed, and that there was no more in circulation than was necessary 
for the dullest part of the year. At that very time came up the effort to 
break down the currency. 

The Chairman. What was the volume of the currency at the time 
that Grant used this expression 1 

Mr. Cooper. $2,100,000,000, if I remember right. At that very time 
Mr. Cyrus W. Field invited to his house, next door, the rich men of New 
York — Belmont, Brown Bros., and the rest. He also invited me. I found 
perhaps a hundred persons present. That was just when President 
Grant's second term commenced, and they wanted President Grant to 
veto the bill giving us a regular, substantial, thoroughgoing legal-tender 
money, such as Mr. Stanton cried over because he could not get it. We 
met at Mr. Field's house, and I was put in the chair to preside over 
that meeting. Pretty soon I found that the meeting was called for the 
purpose of signing a petition to President Grant asking him to veto 
that bill, and I was the only man in the company who refused to sign 



378 DEPRESSION IN LABOR AND BUSINESS. 

it; That shows the power of the bankers and the dangers of such an 
organization. 

The Chairman. This meeting, you say, was composed principally of 
bankers ? 

Mr. Cooper. Of persons who dealt mostly in money. I knew only 
very few of them. Then there was a meeting at the Chamber of Com- 
merce called to stimulate President Grant to do the same thing. I was 
there, and I was the only one to vote against such a proposition. That 
was about 1872 or 1873, at the time of Grant's second election. 1 hap- 
pened to take along with me a little article which I had written on the 
subject, and before I voted I called the attention of the meeting till I 
read that article. I was in a minority of one, but I felt so certain that 
I was right that I did not doubt myself, and I published a plan to get 
along with the difficulty, which was how to get rid of the gold brokers. 
I proposed that all merchants should have the privilege of paying duties 
in legal- teuder money by adding to the amount of the duties the aver- 
age difference between gold and paper during the previous month. By 
that means the merchants would not be forced into the hands of bro- 
kers in order to get gold to pay duties. They could pay the amount in 
legal tender money. But that did not satisfy the brokers at all. 

Now I come to the difficult part — to the part that is most difficult to 
deal with — that is, the efforts that had been made to divert the gov- 
ernment from its true course, and to drive Congress into special legis- 
lation instead of general legislation for the welfare of the country. 
The brokers petitioned Congress to put in the law for the issue of legal- 
tender money the little word " except," by which greenbacks were made 
a legal tender for all purposes " except" for the purpose of paying du- 
ties on imports or interest on bonds. That little word u except " accom- 
plished that great object. Not satisfied with that, they wanted the 
bonds which had beeu made payable in currency to be made payable in 
coin, and they also got that through Congress. 

The Chairman. Have you any doubt in your own mind that that 
kind of legislation was advised and recommended by the agents of for- 
eign capitalists'? 

Mr. Cooper. I believe it most certainly. There is no question of it 
at all. The proof of that was shown by the efforts made to get our 
silver money demonetized at the time that it was three per cent, bet- 
ter than gold. That was done, beyond any doubt, by Euglish agen- 
cies. The command was sent over for that purpose. It was reported, 
whether true or not, that a committee of English bankers came over 
here with $500,000 for the purpose of having it done. Not satisfied 
with gettiug the bonds and the interest on the bonds made payable in 
coin instead of currency, they asked, as the next thing, that that coin 
should be made to mean gold. Then they wanted the bonds relieved 
from national and State taxation, and they got that. Not even satisfied 
with that, they then wanted to take from the common people the small 
fractional currency, and they succeeded in that, thereby putting a debt 
of $50,000,000 on the people as a compensation for taking away from 
them one of the greatest conveniences which they had; $10,000,000 of 
that fractional currency is outstanding still and never will come back to 
the Treasury. Not even satisfied with that, there has been a constant 
effort to take the small bills ($1 up to $5) away from the people, so that 
the people should be forced to use silver. 

The Chairman. Now we have reached a point where you can braneh 
off to the main issue. What was the effect of all these measures which 



DEPRESSfON IN LABOR AND BUSINESS. 379 

you have been talking about on the industries of the country and the 
wages of labor ? 

Mr. Cooper. It was the effect which such a course must naturally 
produce. It was like taking away good tools and materials from a man 
and. telling him that he must work without them. It was like taking 
the straw from the Israelites of old and telling them that they must 
make bricks without straw. There were two things at the close of the 
war which every right minded man should have looked at with the 
greatest care. They should have said, u Here are 1,500,000 soldiers (our 
army and the Southern army) to be disbanded ; and not only that, but 
here are 4,000,000 slaves to be set free.' 7 The currency of the Southern 
people had become good for nothing. They had no tools to work with, and 
they were expected, to build themselves up without any tools, and with 
their property shrunken away to a mere nothing. Instead of helping 
them by keeping the currency out to its full extent, Mr. McCulloch 
made use of all his arts to prevail on Congress to shrink the currency. 
He said that in so many words at a dinner given by the Chamber of 
Commerce. He said that people thought that the shrinkage of the cur- 
rency had taken place under President Grant, but that he took to him- 
self the credit of shrinking up the currency. He said that under his 
administration of the Treasury Department the currency was shrunk 
more than $500,000,000—8250,000,000 positively, and more than $250,- 
000,000 which had not yet come on the banks. I published that state- 
ment for Mr. McCulloeh's benefit, and it has not been denied. It was 
also published in the report of that dinner that he said he had found 
great difficulty in persuading Senators and Members of Congress to 
allow that thing to be done. 

The Chairman. With the knowledge that you have of the country 
and its trade what, in your judgment, ought to be the amount of cur- 
rency in circulation ? 

Mr. Cooper. I could judge better by looking at the currency of dif- 
ferent nations. France has a currency based on perhaps as sound a 
principle as we can ever expect to see adopted. Through all the trouble 
that they have had in France the paper of the Bank of France has 
never been more than 2^ per cent, below par at the worst of times. The 
French have a circulation of about $50 a head, while we have only a 
circulation of $14 or $15 a head : and one-half of our circulation is lying 
to-day in the banks and the vaults of the Treasury. 

The Chairman. How do you explain the decay of our merchant 
marine ? 

Mr. Cooper. The decay of our merchant marine arises out of facts 
which hardly anybody considers or talks about. When Franklin was 
minister to England, or was iu England, he was called before a com- 
mittee of the English Parliament and questioned as to the causes which 
produced the great prosperity of the Americau colonies. England had 
become jealous of the prosperity of the colonies, and Franklin commenced 
to tell them the cause. He said that the causes which gave them this pros- 
perity were the facilities which the colonial government had furnished for 
doing business. That was the issue of Treasury notes, that were made re- 
ceivable for taxes. He said that when the people found that they had some- 
thing with which to pay their taxes they were so delighted with the money 
that they hoarded it for that purpose. ' Gold and silver were pretty much 
out of the way, for the English Government had commanded, three years 
before, that nothing but gold and silver should be received for taxes. 
That brought on the revolution, for the people could not pay their taxes, 
and, as Franklin stated before that committee, the cause of the great 



380 DEPRESSION IN LABOR AND BUSINESS. 

prosperity of the colonies was that they had used Treasury notes, and 
that in some of the colonies these Treasury notes had gone as high as 
3 per cent, premium when they were made legal tender. When the 
English Government saw that the colonies were prospering in that way-y, 
it issued an order that all taxes should be paid in gold and silver. That 
brought on the war of the revolution. We fought that war with the 
help of the continental money. The States could not be bound for that 
money any further than by a simple promise that they should pay their 
quota. Finally the Constitution was adopted, and the States yielded 
up so much of their State sovereignty as was absolutely necessary to 
make us a nation. 

The Chairman. That war destroyed the commerce of the country 
pretty much ? 

Mr. Cooper. Yes; it destroyed what little commerce there was„ 
There was where our difficulty was. After the Constitution was made, 
the States were bouud by that Constitution to make all necessary and 
proper laws to carry it into execution. The Constitution had said that 
Congress should do thus and so — that Congress should coin money, 
and should regulate the value thereof, and should regulate commerce 
with foreign nations and among the several States. That could not be 
done without a currency over which the government should exercise 
entire control. It could not exercise control over a silver and gold 
currency, because such a currency is always fluctuating according to 
the demand of foreign trade. But Congress could control what was 
known as continental money. That money was promised to be paid in 
Spanish milled dollars, but there were no Spanish milled dollars to pay 
it in when we got through the war. Then came up the duty of Congress 
to establish commerce. The first thing to be done then was to call in 
and recognize this continental money. It was known exactly how much 
had been paid out for absolutely necessary purposes, because when that 
money began to fail they looked at the stock lists, as they do now, to 
see how much per cent, it was below par; and each day, as it failed, 
they issued enough of continental money to make the amount equal to 
so many Spanish milled dollars for that day, and so it did .to the end 
of the chapter. 

The Chairman. Like the men of the West giving mortgages on their 
land to payoff mortgages on their chattels. That is about the illustration 
of it. 

Mr. Cooper. Yes: that is just it. Then they established a tariff, 
and the moment that was doue an impulse was given to the manufact- 
ures of the country. I will read you something I wrote on that 
subject : 

In 1828 our government found it necessary to adopt what I call a true American sys- 
tem ot free trade. It was a system of free trade that extended to all parts of our own 
country on all articles that are the products of our own soil or labor. 

To encourage this system duties were levied on imports, that soon gave new life and 
energy to the trade and business of the country. 

The public debt was soon paid off, and prosperity became universal. 

By degrees, between 1834 and 1842, the tariff was repealed; the mills were again 
stopped ; furnaces closed ; lands fallen to half price ; the sheriff at work ; States repu- 
diating their debts ; the Treasury unable to borrow at home or abroad, and bankrupt 
laws passed by Congress. 

In 1842 the national system was again tried, and in less than five years the produc- 
tion of iron alone rose from 200,000 tons to 800,000 tous. 

Prosperity was universal ; mines were opened ; mills were built and money plenty i 
and the public and private revenues greater than ever. 

Once more, in 1846, the British free-trade policy was adopted by repealing our tariff;, 
and, notwithstanding the discovery of gold in California, money was as high as ever. 

British iron and cloth came in and gold went out. 



DEPRESSION IN LABOR AND BUSINESS; 381 

In 1357 the culmination was reached, and a crisis of ruin came on. 

The Treasury was again nearly bankrupt. In three years immigration fell below 
the point of twenty-eight years before, and our exports fell, off to a mere nothing. 

Why were all these scenes of wreck and rain brought on our country '! Mr. Carey 
has well said, "It was because our country adopted a British policy that has drained 
to itself the wealth that did not resist it." The result of the two systems, as shown in 
contrast, is as follows : 0;.r national system, as seen in 181Q, 182"$, 1^42, and 1861, when 
labor was well paid, money plenty, immigration great, and prosperity universal. 

It is well for us, the people, to look at the condition of our country during the times when 
we were introducing what I call the British monopoly system of free trade — when this 
system was allowed to operate in connection with our use of the paper money of incor- 
porated state banks. 

The consequences, as they appeared in 18L7, 1834, and 1857, when labor was illy paid, 
money scarce, immigration declining, and bankrupts by thousands. 

A system of free trade that leaves such fruit, although it may look as beautiful as 
the whited sepulchre of old, if it is intended to operate in connection with a paper cir- 
culating medium, it should be dreaded as we dread the presence of a pestilence. 

The fathers of our constitutional government intended to guard their posterity against 
the train of evils that would follow all attempts to legislate a permanent value into a 
paper circulating medium. 

The Chairman. Then yon attribute the decay of our merchant ma- 
rine to our adoption of the English revenue policy? 

Mr. Cooper. I attribute it to our yeldiug to the English revenue 
policy. 

The Chairman. And abandoning our protective principles ? 

Mr. Cooper. Yes ; I want to be understood as saying that the rev- 
enue policy of our country has no example in any other country, because 
we pay higher wages here than is paid in any other country ; and we 
have been able to do so from the fact that we had a country of such 
vast extent, and that we had such a flood of immigration, reaching up 
to 450,000 people in a single year, and all compelled to buy at high prices 
and to buy laud that cost us nothing. Since I have lived on Murray 
Hill I have been offered eighteen acres of land bounded by Fifth and 
Eighth avenues for $11,000. I refused to buy it because I would not 
go in debt for anything. I bought all the land I could pay for and still 
keep my business going on. A friend, of my father's, who was president 
of an insurance company, had to sell this property, and a little while 
afterwards the purchaser sold part of it for $450,000. 

The Chairman. What I want is your own views with reference to 
the decay of our commerce? 

Mr. Cooper. I have summed it up in these words : 

It should be remembered that the use of paper money and the terrible necessities 
of war have so increased the prices of all property and labor that governmental pro- 
tection has been made an iudispe usable necessity to the amount of the difference in 
gold between the amount that is now required to purchase a day's labor in our conn- 
try as compared with the amount that will purchase a similar day's labor for gold in 
other countries. 

It was the failure on the part of the general government of our country to perceive 
and realize the fact that the use of an expanded paper circulating medium has so 
changed the value of all property and labor, that all exchanges have been rendered 
unequal to the amount of the difference in gold between the amount that is required 
to purchase a day's labor in our country, as compared with the amount of gold that 
will purchase a similar day's labor for gold in European countries. 

It was the failure of our government to arrange and keep the tariff based on the 
difference in the cost of labor between our own and other countries that has cost the 
nation the loss of a steam marine that was worth thousands of millions to our coun- 
try. It was a steam marine that had been nobly won for our country by the genius, 
skill, and enterprise of men that had earned a better fate than they had received. 

There has been nothing comparable with the evils that have and may result to na- 
tions from a war of commerce. Invasion of armies is attended with waste of property, 
destruction of life, and suspension of all fair exchange of the products of labor; but, 
with the return of peace, men can again combine their efforts, and in a few years all 
is as it had been before. Such, however, is not the case with the substitution of for- 
eign trade for the home commerce of the products of our own land aud labor. Under 



382 DEPRESSION IN LABOR AND BUSINESS. 

the artful and alluring fascinations of the powers of foreign trade, association for 
inn trial benefit dies away, intellect declines, and the life's blood of a natiou sl<»wly 
ebbs away, rendering recovery from day to day more difficult, and closing finally in 
the material and moral death of a nation. 

The Chairman. Would a change of our present system of revenue 
laws necessarily restore our merchant marine after the hard blows it 
has had f 

Mr. Cooper. It would not, and will not, and could not. We could 
not maintain a merchant marine even if we got the ships for nothing 
so long as we give a man S3 a day for puddling a ton of iron here, while 
the English only pay $1.50 for the same work. 

The Chairman. Then it is .to be a work of time ! 

Mr. Cooper. Xo 5 it is to be a work of proper legislation ; and I will 
show you how. I should like to see such legislation adopted as will re- 
move the evils that have afflicted the country, and that will ruin it un- 
less we do what nature and commou sense dictate should be done — 
that is, to establish justice as nearly as possible. Some time ago a 
man wrote me back in reply to one of my publications saying that of 
all the plans suggested mine was the only one that would accomplish 
the object, and that that object would " bring glad tidings of great 
joy n to all the people. It would make us like a city on a hill, so that 
all nations would take example by us. My plan was simply this — to 
take measures indispensable to establish justice in this way : First, 
Congress must require of the States to take a complete per capita cen- 
sus of their inhabitants. 

The Chairman. That is what they are doing now. 

Mr. Cooper. That is what they are doing now. Then there must be 
a complete census of the inhabitants of each county in each State ; and 
then you must deal justly with the people. We know that the money 
which we paid out during the war, up to the day the war ended, was 
the people's raouey. It has been wrongfully taken from them, and it 
must be given back to them in some way, or else the liberties of the peo- 
ple shall be lost. Now I will tell you how this is to be brought about. 
The government should acknowledge the money that was in. circulation 
at the close of the war as the people's money, and it should reissue this 
money to the people, giving it to each State in the Union accordiug to 
its population at the rate of 1 per ceut. a year on condition that each 
State shall promise to agree to loan that money out. It should be 
loaned by the State to the comities first at 2 per cent, on condition that 
the counties should loan it out to men having mortgages on their farms 
at a rate equal to the last taxation. First, 1 per cent, is to be paid to 
the government by the States ; then 2 per cent, is to be paid to the 
States by the counties ; and then the comities shall loan it out at 3 per 
cent, to people -having mortgages. 

The Chairman. Is there not too much machinery involved in that 
plan to make it practicable ? 

Mr. Cooper. Not at all. It can all be done in the simplest manner. 
A State has so many inhabitants aud gets such an amount of currency 
from the government, and a county has so many inhabitants and gets a 
proportionate amount from the State. 

The Chairman. Then it is a distribution of currency per capita 1 

Mr. Cooper. Yes, right down until you get the mortgages paid off 
that are now at 10 and 15 per cent, interest. 

The Chairman. How is our merchant marine to be reinstated ? 

Mr. Cooper. It can never be reinstated till money is as cheap in this 
country as it is in England. It can be done when money is as cheap 



DEPRESSION IN LABOR AND BUSINESS. 383 

here as 3 per cent. It is the rate of interest that controls the matter. 
We must have cheap money here to enable us to compete with England 
If we have cheap money then a poor man is not taxed to death, and 
gets wages in comparison. The suffering of the country is caused by 
the debt that is hanging over the people like a millstone. See what a 
deliverance it would be to all the western people if they could only have 
to pay 3 per cent, on mortgages instead of an average of 10 per cent. 
Then they wonld see the value of their land. Xow they do not see what 
they can do with it because they cannot pay the interest on their mort- 
gages. 

The Chairman. You have not given au exact and categorical answer 
to one question. You have given us a detailed statement of your views 
as to the prostration ot business aud of the diminution of wages, but 
you have uot given us your reasons for that state of things. You spoke 
of the war and of the increase of values ; but if there had been no war, 
would there not still have been a depression in the business affairs of 
this country ! 

Mr. Cooper. Yes ; unless we could protect ourselves by a tariff equal 
to the difference between the wages paid in this country aud those paid 
in England. 

The Chairman. Then, even without the war. the catastrophe would 
have come ? 

Mr. Cooper. It would. We cannot maintain a merchant steam ma- 
rine at all. If we had the ships for nothing we could not maintain it : 
because, with the low wages which are paid on the other side, the En- 
glish could outdo us. 

The Chairman. What wages do the Scotch ship-builders pay f 

Mr. Cooper. Xot more than one-half what we pay here. Our ship- 
carpenters used to get 85 and $G a day. Wages in Scotland at those 
shipyards are not over 10 or 12 shillings. 

The Chairman. What are your views in regard to the system of tak- 
ing up currency and putting it into national bonds ? What do you think 
of that policy of Mr. Sherman ? 

Mr. Cooper. It is the saddest policy that was ever adopted. It puts 
capital beyond the reach of taxation, and it builds up a moneyed oli- 
garchy in the country entirely independent of what suffering there is 
around. 

The Chairman. You would increase the currency rather than con- 
tract it ? 

Mr. Cooper. I would increase it rather than contract it. I would 
only increase it to the amount that belongs to the people. If I had had 
the regulation of the issue of currency from the beginning, I would have 
begun with a very high currency so that it would be as valuable as the 
currency of any other country. 

The CHAIR3IAN. Then you are not an inflationist ? 

Mr. Cooper. I am the very opposite of it. 

The Chairman. But you are in favor of as much currency as is neces- 
sary to do the business of the country ? 

Mr. Cooper. Yes. The government is not performing its first duty, 
which is to take and hold control of the currency. Congress having 
failed to do that, and having let high prices come into existence, is now 
bound to protect the people by a tariff'. But now we have got to a rate 
of wages almost low enough to enable us to contend with foreign coun- 
tries. Not quite, however, because our wages are still double what they 
are in other countries. 



384 DEPRESSION IN LABOR AND BUSINESS. 

The Chairman. What is your view in regard to specie resumption 
last January \ 

Mr. Cooper. It was the most unfortunate thing that has happened 
to the country in a great while. 

The Chairman. In what particular ? 

Mr. Cooper. In this particular: That there are bonds enough abroad — 
national, State, county, and city — to enable England at any time to put 
us in difficulty. It only needs the sending back of $200,000,000 or 
$ 300,000,000 of bonds to take away all our gold and silver from us. 

The Chairman. Is there a marked difference in the increase of busi- 
ness in this city within the last six or twelve months? 

Mr. Cooper. A very marked difference — an unnatural difference. I 
can hardly account for it. It has been produced by a single thing, the 
construction of the elevated railroads in this city. These roads made 
such a demand for iron, so unexpected a demand and wanted so quickly, 
that a large number of iron works had to be set going to supply the 
demand. That means giving employment to a great number of persons. 
The stock of the elevated railroads increased so wonderfully that, I 
believe, Mr. Tilden realized a very large profit on the sale of his stock. 

The Chairman. You do not think that what is called specie resump- 
tion has had anything to do with the increased prosperity of this city, 
or any other part of the country ■% 

Mr. Cooper. No, sir. My opinion is thaffc the government has had 
the power always, since the war ended, of making paper at par with 
gold at any* time by saying that it would receive legal-tender money in 
payment for taxes, debts, and dues of the government. Then legal-ten- 
der currency would never have been below par. 

The Chairman. What do you think of the policy of retiring the 
national-bank issue? 

Mr. Cooper. That is indispensable. I do not believe in any money 
except national money- — something over which the government can ex- 
ercise entire control; and I should make that control as positive as 
the yard-stick is in regard to measures. The government can do so by 
just saying, "Here is this money belonging to the people. We will 
make it the unfluctuating measure of all values for all time, the amount 
never to be increased or diminished except in a per capita relation to 
the people. 1 ' Then we would have a measure of the internal commerce 
of the country, and need not look abroad for gold. 

The Chairman. Would you fix a time for the redemption of the legal- 
tender currency? 

Mr. Cooper. It would never be redeemable at all ; it would be the 
people's money. An ancient philosopher, Plato, said that a currency 
should be that thing most valuable to the state, and of no value for 
anything else. . ' 

The Chairman. What opinion have you in regard to the taxing of 
Incomes? * 

Mr. Cooper. It cannot be done. The whole revenue of the govern- 
ment should be received from duties on imports ; and if that source 
does not produce enough, then let us have a stamp act. 

The Chairman. There is no provision for taxing the bonds, but there 
should be some power by which the proceeds in the shape of interest 
on bonds could be reached in the way of taxation. I want your views 
clearly on that point. 

Mr. Cooper. The government made one of its greatest failures in 
not regulating tbe value of money; and how can it regulate the value 



DEPRESSION IN LABOR AND BUSINESS. 385 

of money without declaring" bow much interest may be legally collected 
for the use of money? Is there any way but that ! 

The Chairman. It seems to me that if I had a neighbor who had 
81,000,000 invested in United States bonds, he should be taxed on the 
interest which he receives from those bonds. I hold that a man's in- 
come should be subject to taxation. 

Mr. Cooper. You could not collect an income tax, because so many 
persons would swear falsely to their incomes. A gentleman told me 
three or four years ago that he knew of $4,000,000 or $5,000,000 that 
had been taken out of New York, and placed in the hands of sisters 
and cousins and aunts, so as to keep it out of the reach of taxation. 

The Chairman. But the assessor has power to put the tax-payer un- 
der oath. 

Mr. Cooper. That does not make much difference. The principle 
of an income tax is correct, but I do not think its collection is practica- 
ble. 



Xew York, October 28, 1879. 
Views of Mr. George W. Bean. 

Mr. George W. Dean came before the committee at its invitation. 
He stated, in answer to preliminary questions, that his age is 54 $ that 
he was born in Boston, but has been a resident of New York for the 
last 54 years ; that he has been thirty-three years in business, princi- 
pally dealing in real estate. 

The Chairman. Have you any clear and regular idea of the causes 
that have produced the disasters to the business affairs of the country 
and the depression in labor during the last ten years % 

Mr. Dean. Yes ; T think I have. 

The Chairman. State what, in your opinion, has been the cause of 
the disasters to business affairs and of the depression of labor for the 
last ten years. 

Mr. Dean. The cause of our country's poverty in employment and 
gold, statistics prove, was the adding of an overwhelming balance of trade 
debt from the year 1863 to 1873, which amounted according to official 
returns to over ten hundred million dollars (11,000,000,000), an unneces- 
sary burden and loss in employment, gold, and United States bonds, ad- 
ded to our great war debt. This trade debt, and stagnation of business, 
is the result of lowering duties to suit importers, as was the case in the 
years preceding the bankruptcies of 1837 and 1857, which should have 
been averted by increasing duties, reducing imports below trade exports. 
See excess of imports over exports, as follows: 
H. Mis. 5 25 



386 



DEPRESSION IN LABOR AND BUSINESS. 



Tear. 


Losses in bal- 
ance of trade 
against our 
country. 


Gain in balance of 
trade in favor of 
our country. 


Loss in excess of 
specie exported 
in settlement 
of balance of 
trade. 


1863 


$39, 370, 818 
157, 559, 295 

76, 332, 082 
85, 952, 544 
98, 459, 447 
75, 483, 541 

131, 388, 682 
43, 186, 640 

77, 403, 506 
182, 417, 491 
119, 656, 288 




56, 571, 956 
92, 280, 920 

57, 833, 154 
75, 343, 979 
38, 797, 897 
79, 595, 734 
37, 330, 504 
31, 736, 486 
77, 171, 964 
66, 133, 845 
63, 127, 637 
38, 175, 499 
71 231 425 


1864 




1865 




1866 




1867 




1868 




1869 




1870 




1871 




1872 




1873 




1874 


$18, 876, 698 


1875 


19, 563, 725 










1, 106, 774, 059 
18, 876, 698 


18, 876, 698 
People mortgaged for 


785, 331, 009 
302, 566, 352 




1, 087, 897, 361 




1, 087, 897, 361 







The way Congess restored business after the bankruptcies of 1837 
and 1857 was by a very large increase of duties on imports of our kind 
in the years 1842 and 1861, which immediately gave confidence and em- 
ployments to our producing and laboring classes. 

This country's market is worth more to our industrial manufacturing 
interests than all the other markets in the world. Give them this, their 
own market, which belongs to them by right and reason, and they will 
have no longer any want of business aud prosperity. Then the nation 
will save the money ($300,000,000 per annum) now foolishly paid abroad 
to create overproductions of goods in our market which can be as well 
made at home, without the loss of paying the foreign cost, as we do 
now. At home, the cost of production is to our country labor alone. 

Foreign manufacturers desire low duties upon their goods, and are 
willing to pay to cause a reduction of duties for them. 

No tariff is practically protective that does not give our country a 
favorable balance of trade, and when it does so, don't destroy that 
balance in our favor by reducing duties. 

All creditor nations are great manufacturing nations, while debtor 
nations are not manufacturing nations, but borrowing and dependent 
nations. 

Low or non-protejctive duties are only suitable for a people who can 
afford to work lor the lowest earthly wages and whose country's indus- 
tries cannot be usurped by foreign competition. 

The overwhelming balance of trade debt created from 1863 to panic 
of 1873, amounting to over $1,000,000,000, is fast being liquidated by a 
favorable balance of trade in our country's favor. The tariff duties, if 
now reduced, will turn again against our country an adverse bal- 
ance of trade, with all its attending evils, and before we have gained in 
the total amount the sum our people lost in the above-named years, by a 
tariff too low then, to check excessive imports over our exports. All 
tariffs are too low which do not give our country a favorable yearly bal- 
ance of trade, whatever the rates of duty may be. The higher the duties 
the more completely are American industries protected and developed to 
the advantage of our working clases and producers of all and every 
other kind of American growth or production. When the mining and 
manufacturing industries thrive, the farmer finds better prices for his 
products at home than abroad and a quicker market. When either suf- 
fers for the want of demand from the other, both are made to suffer, and 



DEPRESSION IN LABOR AND BUS. NESS. 387 

all American iudustries should unite together as one man in defending 
any American interest against all foreign combinations in Congress to 
usurp and destroy either American employments or productions. 

The free-trade league now assert and proclaim that the Uuited States 
must buy of other natious if we wish to sell them our exports. This is 
silly argument. The United^States bought from the years 1863 to 1873, 
panic) over one thousand millions of dollars of foreign nations more thau 
foreign nations bought of us. We then bought more than we should, but 
they did not commit the same folly, and would not if we committed the 
same folly over again. This doctrine is better answered now by our in- 
creased sales of exports, and our large decreased purchases of imports, 
now giving our county a favorable balance of trade, which alone 
checks the foreign demand for gold, and thereby destroy the premium 
by removing the cause. 

The Chairman. State the causes of the destruction of American 
commerce. 

Mr. Dean. My answer is, 1st. The acknowledgment of belligerent 
rights by England to the South, which permitted acts of war upon our 
ocean commerce, and partly destroyed it. 2d. The revolution from wood 
to iron for ship-building. 3d. The want of patriotism and statesman* 
ship in our nation's law-makers in not paying a sufficient sum for mail 
service, as other nations have done, to sustain their shipping interest. 
4th. To remedy the above misfortunes I would recommend a law to be 
made favoring American shipping by differential duties upon imports 
carried in American bottoms; this law to be guaranteed to our ship- 
owners for a certain number of years — for instance, ten years. This, I 
hold, would quickly restore our ship building industries and restore our 
ocean tonnage. 

The Chairman. What is your idea as to the policy of an income tax 
as a source of revenue % 

Mr. Dean. I favor an income tax, because it is just, and falls only 
on those who are the most able to contribute to the support of the gov- 
ernment; they being the ones who have received the most favors under 
our laws, and are the ones who really have more use of the government 
because possessing more of value which needs the most protection, and 
for the further reason that taxation should be uniform, and operate 
equally on all trade?, occupations, business, and incomes. 

The Chairman. What would be your remedy to present a recurrence 
of the disasters already experienced? 

Mr. Dean. The remedy to prevent the country's past ills from occur- 
ring in the future, will be in always having tariff laws that encourage 
economy in our imports, and encourage all kinds of industries at home; 
in other words, a tariff that will give the American working-people a 
preference in their own market over the productions made abroad, thus 
keeping the cost of foreign imports largely below America^ exports. 
Gold and bonds will flow from abroad, in settlement of th-3 balance of 
trade in our favor, creating a supply of gold greater than our needs, 
and demand, removing permanently the cause and complaint of a su- 
perior value of gold over United States notes, and which would prob- 
ably in time place gold, like silver, at a discount. 

Tariff protection to one or many of our labor industrial pursuits 
against foreign competition is not (as asserted) at the expense of any 
other American class or section of our country, for what benefits one 
State or class as a member of the whole country prospers the entire 
nation. Protection to American employments is wholly at the expense 
and loss of the foreign producer, who is deprived of supplying our mar- 



388 DEPRESSION IN LABOR AND BUSINESS. 

ket, which is that much gain to our employments — for be it remembered 
what would have been the foreign cost, if imported, would have been 
our country's loss, in money and employments, as a penny saved is a 
penny gained., 

The South and West, more than any other section of our country, 
should demand a protective tariff for its own welfare and interests, to 
develop its yet undeveloped resources. The South and West, by man- 
ufacturing the raw products now r>roduced by them, would every year 
more than double the value of their present production ; capital would 
seek them — but not until then — as capital seeks only that part of our 
country which possesses enterprise. The Eastern manufacturers dread 
higher duties, as they would develop the South and West at the cost 
and loss of their trade, as living and wages are higher in the East. 

A government that will not protect and develop its country's in- 
dustries is either corrupt or imbecile. 

Let our government give to our miners and manufacturers the same 
practical protection which the farmer has, and which commerce enjoys 
upon American waters. Both are free from foreign competition by law 
and circumstauces. Our country's gain by exports would then exceed 
our needed imports by three or four hundred millions of dollars per an- 
num. In five or ten years our people and government would be out of 
debt by the old-fashioned way — increase of employments and industries 
and saving by reduction in money costs for imports. 

It will reduce the amount of work now unnecessarily done abroad for 
our market one or two hundred million dollars annually, and increase 
ours correspondingly, making a gain to our people of that amount an- 
nually. 

Our country has the greatest natural resources of any in the world, 
and is deficient in statesmanship in making it productive. 

When either of the real producers of our country's wealth, manu- 
facturers, miners, or farmers, are impoverished by foreign competition, 
then all are made to suffer, because each one's productions add to the 
one total production of our country. St. Paul tells us " If one member 
is sick the whole body suffers." 

A large increase of duties on foreign industries of our own kind is no 
increase of taxes upon our own people, but the reverse, being an increase 
of wealth to them, as our government requires only a certain amount of 
revenue for its support, which is as large under low as under protective 
duties. The difference and gain to our people is the increase of em- 
ployment and gold, corresponding with the reductiou made iu the 
amount and gold cost of our imports. 

The more free our communists iu Congress are to give other nations 
our trade, by low duties, the less business, employments, and gold we 
will have for ourselves. 

To reduce our unnecessary imports two hundred millions annually, 
being one-third, is giving our laboring and producing classes annually 
two hundred million dollars of additional employments. 

The Chairman. State your opinion as to the currency. Should it be 
increased? Should the national bank-note issues be withdrawn aud 
legal- tender money substituted % 

Mr. Dean. The currency of the people 1 should be increased to aid and 
provide means to distribute a growing volume of productions and busi- 
ness, and to aid in developing our country's undeveloped resources, to 
the same amount per capita that France enjoys, which country possesses 
none too much business capital. The national bank-note issues should 
be withdrawn to prevent either contraction or inflation of our paper 



DEPRESSION IN LABOR AND BUSINESS. 389 

currency, and legal-tender or United States certificates of deposit made 
a full legal tender substituted in their place. The national hank char- 
ters should be left undisturbed, and left to perform only their legitimate 
business — that of banks of discounts and deposits. The amount of cur- 
rency per capita in the United States is less than in any other commer- 
cial country in the world. This being a younger and more extensive 
country, for many reasons should have per capita the greatest amount. 
In France it is $3(5.85 • Great Britain, $23.60 ; German Empire, $20.64 ; 
and in the United States, $15.00. With $500,000,000 the per capita 
would be but $12 a head. 

The Chairman. State whether, in your opinion, it would be right and 
proper for government to tax incomes as a source of revenue ? 

Mr. Dean. I answer that, yes. 

Mr. Chairman State whether, in your judgment, it would not be a 
wise policy for the government to furnish means and facilities for the 
poorer classes of the population of the country who are out of employ- 
ment to settle upon and occupy the public domain ? 

Mr. Dean. Yes. 1 am in favor of all that ; in favor of it heartily. 
Only I do not know that the community is ripe for the question at pres- 
ent. I think that the people are greatly iu want of education on that 
subject. The government should aid the poor as well as it does the 
rich. It aids railroad corporations. The Pacific Railroad would not 
have been built for a good many years yet had it not been for govern- 
ment aid. When the government stepped in with grants of money and 
land, and with the loan of its credit, the work was done rapidly. 

The Chairman. Do you regard the agricultural interest of the coun- 
try as paramount to any one particular interest? 

Mr. Dean. I think that the agricultural question takes care of itself. 
It cannot be " sold out " as the manufacturers can be sold out. No Eu- 
rupean interests would care to have a law to have farming products 
from abroad admitted here free of duty as they would like to have for- 
eign manufactures admitted. I think that our manufacturers need as- 
sistance and protection ; but instead of having it they are "sold out." 

The Chairman. What I wish you to answer directly is whether the 
agricultural interest of the country is not of more importance than any 
other one branch of industry, and whether it ought not therefore have 
the proper means of development. 

Mr. Dean. Yes ; it is the paramount interest of the country. But you 
cannot very well legislate so that the land will not produce. You can- 
not very well place other countries in competition with ours in regard 
to the products of the soil. But manufacturers need laws to protect 
their interests. 

Adjourned. 



TESTIMONY TAKEN AT BOSTON. 

Boston, Mass., November 4, 1879. 
The committee met in a room in tbeEevere House; present the chair- 
man and Mr. March. 

Views of Mr. H. H. Bryant. 

Mr. H. H. Bryant appeared before the committee by its invitation. 
The Chairman. The object of this committee, under instructions re- 
ceived from the House of Representatives, is to inquire into the causes 



390 DEPRESSION IN LABOR AND BUSINESS. 

that have produced the depression in the industries of the country, and 
especially in the labor of the country. We are to examine and to ascer- 
tain, if we can, what legislation, if any, Congress can adopt on the sub 
ject. Where do you reside! 

Mr. Bryant. In Boston. I have resided here since 1866. 

The Chairman. What has been your business and occupation during 
that time! 

Mr. Bryant. I was brought up in the wholesale clothing business — 
ready-made clothing at wholesale. 

The Chairman. Have you pursued that as your occupation ever 
since? 

Mr. Bryant. Yes, until the last few years. 

The Chairman. State in your own way what your opinion is as to the 
causes that have produced the great depression in the trade of the coun- 
try within the last several years. 

Mr. Bryant. It was produced by a change in the value of money — 
the medium of exchange. It could not be done in any other way. 

The Chairman. How? 

Mr. Bryant. There never w T as such a thing as a general fall in prices 
unless it was produced by changing the quantity of the money. There 
never was such a thing in the history of mankind as a general rise in 
prices unless it was produced by a rise in the quantity of money. 

The Chairman. Has the contraction of the currency been the cause 
of the difficulties that have occurred from time to time in this country 
for the last fifty years % 

Mr. Bryant. It always has been so — sometimes it has been by the 
exhaustion of gold and silver mines, and sometimes it has been caused 
by the destruction of paper money that was in use. All depressions in 
all ages have been caused by changing the quantity of the money. 

The Chairman. Give your reason. 

Mr. Bryant. The reason for it is this : When the money is appreciated 
by the contraction of its quantity, that necessitates the giving of a greater 
amount of labor, of the products of labor, in the payment of debts. As all 
wealth must be produced, it is evident that any change in money which re- 
quires the producer to give more of the product of his toil in the payment 
of debts is an injury to him, and any hardship of that character to the pro- 
ducer falls on the entire remainder of society, for the reason that more and 
more ot the product of toil goes to the capitalist in the payment of debts, 
leaving less and less for the remainder of society. On the other hand, 
increasing the quantity of money (which necessitates an increase in 
prices) enables the producer to pay his debts or the debts of society (be- 
cause the producer pays all debts) with less and less of the products of 
his toil, thereby leaving more and more in his hands for the patronage 
of general society. That makes good times, good trade. 

The Chairman. The difficulties in this country seem to have com- 
menced about 1873. Explain the causes of their commencing at that 
time. 

Mr. Bryant. My explanation of why the panic or revulsion of 1873 
took place subsequently to the time when the greatest contraction in the 
volume of money was made, is this : As the government contracted the 
money (converted it into interest-paying bonds), private credit came for- 
ward in the place of the government credit that was withdrawn. Hence 
we see that the loans of the national banks in 1865 stood at some three 
hundred and sixty million dollars, and in 1873 this use of private credit 
(to take the place of the government credit which had been withdrawn) 
swelled the loans of the national banks to nearly one thousand millions. 



DEPRESSION IN LABOR AND BUSINESS. 391 

The expansion of private credit for the time filled the gap caused by the 
contraction of government credit. When private credit could not span 
that gap any longer, we had the panic. There comes a time always 
when men are asked to pay their debts, and when that time comes, if 
there has been a great contraction of the money, it necessitates what 
we call a commercial revulsion. There is no money to pay debts, and 
there is a great smash throughout the country, business having been 
carried on by credit taking the place of money. Every merchant is 
familiar with this truth that in 1863, 1864, and 1865, the business of the 
country was done either for cash or for short credit, and when the mer- 
chant's note was due in those years it was promptly paid. There was 
abundance of money to enable this to be done. But as the government 
commenced contracting the money, the merchant found year by year 
that instead of paying his note with money he had to pay it by making 
a new note, and this process was kept on ; the merchants kept getting 
deeper and deeper into debt with the banks, until, as I before said, the 
time came when the merchant was actually asked to pay his note in 
money ; and when he was asked so to do, he found that there wasn't 
enough money in existence to do it, and then came a great panic. 
Therefore, when private credit wasno longer able to sustain high prices, 
the high prices came down to the level of the money and of the credit 
that was left. 

The Chairman. Then it was the contraction of the currency that 
was the beginning of the difficulties in the industries of the country "I 

Mr. Bryant. Certainly. 

The Chairman. How would you restore prosperity to the industries 
of the country : ? 

Mr. Bryant. The only honest way to deal with the people is to issue 
money until the purchasing power of a dollar in the United States is 
placed at the same figure that it had when the debt was made. Just as 
long as it takes a man more hours to toil, or takes more of the product 
of his labor to pay the debts, public and private, which he made in past 
years, just so long is general society robbed for the benefit of the money 
loaner and to the detriment of the producing portion of society. 

The Chairman, To what extent would you increase the currency in 
order to meet the objection ? 

Mr. Bryant. It should -be increased so as to place the purchasing 
power of a dollar where it was when the debt was contracted. Any- 
thing else than that is robbery. 

The Chairman. You would not limit the amount of legal tenders to 
any certain figure to be issued, in order to meet the difficulties % 

Mr. Bryant. That is a different question. In the first place, the 
amount of currency (as I have already stated) should be sufficient 
to enable the labor of the country to pay the debts, public and pri- 
vate, with the same amount of labor, or of the products of labor, as 
would have been sufficient when the debt was created. And so on in 
the future. The volume of money should be kept from time to time at 
a point which would forever guarantee that a debt made at one time 
(whether public or private) can be paid at any subsequent time by the 
same amount of labor, or of the products of labor, that would have paid 
it at the time the debt was made. 

The Chairman. How can that be accomplished % 

Mr. Bryant. It never can be accomplished under a system of gold 
and silver money, or of any other kind of money that can flow from one 
nation to another. The only possible way to accomplish it is to give a 
nation a domestic money. 



392 DEPRESSION IN LABOE AND BUSINESS. 

The Chairman. A currency of its own ? 

Mr. Bryant. A currency of its own, which remains at home and 
which cannot be exported or imported. 

The Chairman. Would you have all such currency bear the stamp of 
the general government? » 

Mr. Bryant. I believe that it should be issued by the government, 
and by no one else. I think it barbarous to leave the control of a peo- 
ple's money in any other place than in the hands of the people's repre- 
sentatives. I believe that the control of the people's money should 
never be in the hands of any class or corporation whatever, t believe 
that the control of a people's money is as important to a people as is the 
control of its liberties, and that it should be guaranteed to them in the 
same manner as their liberties are guaranteed — by the organic law of 
the land. Under the Constitution of the United States I am a free man, 
even as against myself. I cannot sell myself into slavery. If I make 
such a writing, it is void. It should be the same way with the money. 
Neither I nor any other man should have any control over it. 

The Chairman. What would you do with the banks of the country 
under this view that you express ? 

Mr. Bryant. I am utterly opposed to banks of issue for the reason 
that I have just stated. Banks of deposit and discount are beneficent 
institutions, but banks that can increase or decrease the volume of a 
people's money are about the greatest cursa that can be inflicted on a 
people. 

Mr. Murch. They increase or decrease the value of the people's prod- 
ucts. 

Mr. Bryant. Yes, sir. You can see that truth by looking back only 
a few years and looking at the present state of things. A few years 
back, the money power was engaged in contracting the currency, re- 
ducing the price of labor and of the products of labor without reducing 
the debts to be paid in the least particle; it was done (they said) be- 
cause the mercantile and all other classes of society wanted a fixed value 
given to money, and they said that this could only be accomplished by 
getting back to what was called a gold basis. They said that a gold 
basis would give us stability of prices — something reliable, which men 
could depend upon. In my judgment, the principal leaders of that 
movement knew that they lied when they put forth that claim, because 
there is not a political economist in either hemisphere who has not 
taught for nearly one hundred years that such is not the truth. We 
can see that they are right, and that the men who put forward these 
claims were at least in error when we look at the present state of things 
in this country. We are now on what is called a gold basis. 

The Chairman. Supposed to be. 

Mr. Bryant. Yes. Gold has come into the country to the extent of 
nearly sixty millions within the last four months, and is still flowing 
into the country. The national banks have increased their circulation 
some fifteen millions since December last, and they are constantly in- 
creasing it. And what is the result % Has the gold basis given us the 
steady prices which it was claimed it would do, and in which every mer- 
chant and business man is so much interested? On the contrary, this 
steady influx of money, present and prospective, has made such a rise 
in prices, and is so to raise prices, that it has converted us into a nation 
of gamblers from one end of the country to the other. In my opinion, 
the men who contracted the currency of the country did so for the pur- 
pose of getting possession of the railroads, real estate, bonds, stock, and 
all forms of property, to the extent of some thousands of millions, at 



DEPRESSION IN LABOR AND BUSINESS. 393 

nominal prices, bankrupting a large part of the population of the coun- 
try ; and they are now engaged in swelling the volume of money, which 
must inevitably swell prices, until these monied men can throw the prop- 
erty back upon the people at its enhanced value. The difference be- 
tween the robbery price at which they bought it and the swindling price 
at which they sell it is the measure of their ill-gotten gains. 

The Chairman. Do you think there was a concert of action employed 
to produce this state of things f 

Mr. Bryant. There can be no doubt that there was a concert of action. 

The Chairman. By whom % 

Mr. Bryant. By what we call the money power. That there was a 
concert of action is proved by the fact that the Associated Press, one of 
the most iniquitous and dangerous monopolies that at present crush this 
free people, unanimously supported and argued in favor of the financial 
legislation which has crushed and robbed this people. And, inasmuch 
as their teachings are utterly opposed to the teachings of all political 
economists regarding money, it is evident to my mind that nothing but 
a concert of action could have accomplished this. Five hundred news- 
papers do not agree upon any other question in politics or religion ; and 
the fact that they do agree (and agree as against economists) in regard 
to the question of money is evidence to my mind that it is a conspiracy. 

Mr. Murch. Is not the fact demonstrated by the very name — "Asso- 
ciated Press" — that there is a combination? 

Mr. Bryant. It is. You cannot get into that association for love or 
money. 

The Chairman. Is money at the foundation of this concert of action 
on behalf of the money power and the Associated Press? 

Mr. Bryant. In my judgment, it is. Some of the greatest and most 
far-seeing capitalists of the country, such as Mr. Vanderbilt and others, 
obtained coutrol a few years ago of the Western Union Telegraph Com- 
pany, which has a monopoly of telegraphing in this country. It was 
easy for them to see that in controlling the telegraph they could control 
the daily newspaper press of the country, and that in controlling the 
press they controlled the greatest public teacher ever known to earth. 
And it seems clear to me that anyone who has watched the course of 
the Associated Press in regard to the financial legislation of the country 
cannot fail to see that it has gone forward on a well-matured plan, which 
I call a conspiracy, and which has been solely in the interest of capital 
as against labor. 

The Chairman. Who handled the lever ? Has it been done by poli- 
ticians or by bankers and monopolists % 

Mr. Bryant. I say that some of the greatest capitalists have done 
this thing, and I have mentioned Yanderbilt and others. They have 
done it in the interest of capital. 

The Chairman. You made a remark conversationally a few minutes 
ago, that you had nothing to do with politics and that you took no in- 
terest in them. 

Mr. Bryant. I came of age barely in time to vote for John C. Fre- 
mont for President, and as a young man I took an active part in that 
canvass. I was also an enthusiastic supporter of Abraham Lincoln in 
1860, and I voted for him again in 1861. Since that time, if my memory 
serves me right, I have never cast a ballot nor taken any interest in 
l^olitics or political parties. 

The Chairman. State what effect on the price of wages this contrac- 
tion of the currency, and those other matters that you have spoken of, 
have had. 



394 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Bryant. The modus operandi by which the contraction or expan- 
sion of the money of the people affects the producer and affects prices is 
this: When the money of a country is being contracted in its volume, 
pric9s of all things are necessarily falling, and this fall in prices must 
inevitably continue so long as the shrinkage in the value of money con- 
tinues. If a man is called upon to pay his debts by giving more and 
more of the products of his labor for the given amount of money which 
is necessary to pay his debts, it is plain that he is made to suffer for the 
benefit of the creditor, because while the creditor obtains no more dol- 
lars than were agreed to be paid to him, it is nevertheless true that the 
dollars that are paid to him buy more and more of the wealth which 
labor produces. On. the other hand, when the volume of the people's 
money is increasing and prices are rising (as they necessarily must), 
the debtor is constantly obtaining more and more dollars for less and 
less of his labor, or of his productions, and of course he is benefited 
while the creditor suffers. This increase of money and prices produces 
what is known in business parlance as good times. The explanation of 
it is this : The creditors of society are the few, while the debtors are the 
many. The proportion in this country is probably about five creditors 
to ninety-five debtors. This being true, it is plainly seen that any 
manipulation of money which makes it easier for the debtors to pay 
their debts makes good times for ninety-five people and hard times for 
five people out of every hundred throughout the country. And when 
ninety-five people are prosperous and only five are suffering out of every 
hundred persons in the country, we have what is called good times. 
But on the other hand, under a contraction of the currency, ninety-five 
out of every hundred persons are suffering by the fall in prices, while 
the remaining five are being enriched. And when ninety-five people 
are suffering, and only five are prospering out of every hundred, it 
needs no argument to demonstrate that those would be pretty ha^rd 
times. Many short-sighted people are deceived by saying that they 
owe no debts ; but it is true that almost every citizen owes his propor- 
tion of the city or town debt in which he lives ; owes his proportion of 
the county and state and national debts, and is, therefore, a debtor to 
that extent, although he may not owe a cent individually. Then, in 
these calculation?:, it must be remembered that many millions of people 
owe private debts, and that, according as it takes more or less of their 
labor, or of the products of their labor, to pay those debts, in the same 
proportion they will be forwarded or restricted in the extent of patron- 
age which they can extend to general society. The foundation of all 
these matters is to be found in the fact that all society is sustained by 
the actual producers, and that the producers pay all debts and taxes of 
every name and nature. To illustrate : take a national banker or a mer- 
chant, or a man in most of the professions. He is not a producer in 
any sense. Any of these persons may say that he pays the taxes on 
his house, or the rent of his house (if he be not its owner), and that 
he pays for his food and raiment; but that is not true. He produces 
not one penny of the wealth which supports and sustains him. All 
that is done by the farmer, the artisan, and the other laborers. From 
them, as I have said, all society receives its support. I might liken the 
producers of the country to a great reservoir, out of which the remain- 
der of society draws its support. Hence it is plain that any manipula- 
tion of money which obliges these producers to give more of their prod- 
ucts in the payment of debts of society (and it must be borne in mind 
that they are the sole source from which the debts can be paid), must 
necessarily, be an injury to every person in society except those few per- 



DEPRESSION IN LABOR AND BUSINESS. 395 

sods who, as I have before said, are not more than five out of every 
hundred, and who are benefited by this inerease. This reservoir (if I 
might liken it to water) turns a great many wheels, and if it be borne 
in mind that there is only a certain quantity of it at one time, it is plain 
that any manipulation which would turn a double quantity of water on 
one of the wheels would leave just so much less for the others. 

The Chairman. What is your opinion as to the justice and propriety 
of an income tax ? 

Mr. Bryant. I am in favor of a graduated income tax. I believe 
that the civilization of some future time will be one in which the mil- 
lionaire non-producer will have no more place than a nobility has in 
American society. I believe there will come a time when this country 
will not submit to such a thing as a Vanderbilt or an Astorany quicker 
than it will submit to be ruled by a despot. 

The Chairman. Do you base the opinion which you have just ex- 
pressed on the fact that in this country money is the badge of nobility ? 

Mr. Bryant. Hardly that. My idea is that if no man has more than 
he produces (and it is hard to see how he would have a right to that 
which he does not produce), it will be impossible for him ever to be a 
millionaire. We have millionaires now because we have a system of 
society which permits one man to reap vast amounts of labor, produced 
by other men, to his own benefit and enrichment. The world over, men 
of great wealth are those who never produced a single farthing of it. 
The world over, the men who have no property except that which they 
created by the labor of their hands, are men who are either very poor or 
who have but a small amount of property. In our present civiliza- 
tion we have reached the point where men are agreed that physical 
might is no longer right, and I do not doubt that some time in the future 
we shall reach that other and far-reaching truth, that mental might 
does not make right. In some small way we recognize that truth now. 
No community would justify a W T ebster in overreaching an idiot in any 
trade, although it is a fact that the whole business of the country is to- 
day couducted on the principle that it is perfectly just and right for a 
man possessing great foresight and judgment to overreach his neigh- 
bors in any business transaction (I mean overreaching them through 
foresight and judgment), and by so doing obtaining for himself the best 
of a bargain. 

The Chairman. That is on the principle of one man robbing another 
and calling it business % 

Mr. Bryant. Yes. 

The Chairman. How are you going to change that ? Can it be done 
by law ? 

Mr. Bryant. No ; I think it will be the outgrowth of time, just as we 
have doue away with the theory that might makes right. 

The Chairman. Then you give us as the result of your examination, 
that, in your judgment, we want less contraction and more currency ? 

Mr. Bryant. In my judgment, neither the American people nor any 
other nation will ever be able to escape from what is know T n as hard 
times or commercial revulsions until the volume of money is controlled 
by the government, and is issued solely by the government— on a plan 
which shall forever keep the purchasing power of a dollar as nearly at 
a fixed point as possible — and it is possible to do so quite nearly. 

The Chairman. Would you make the legislative power the sole judge 
of that? 

Mr. Bryant. I would not give the legislative power any control what- 
ever over the money, for it v?ould be about as bad to have the volume 



396 DEPRESSION IN LABOR AND BUSINESS. 

of money controlled by Congress as to have it controlled by the banks. 
What Ave need is an amendment to the Constitution which shall provide 
that the money shall be issued solely by the government — that no other 
money shall be used in the country. In order to keep thismoney so to be 
issued at something near a fixed value from one decade to another, it 
would be necessary probably to provide for a bureau or board of commis- 
sioners, whose dutyit should be to take, say one or two hundred articles of 
American production, and to keep their average price from year to year. 
At any time that the average price of these articles was sinking, it would 
be evident that the value of money was appreciating, thereby requiring 
labor to give more of its production for the payment of all debts than 
was justly due; and in that event, this constitutional amendment should 
make it mandatory on the Secretary of the Treasury to issue sufficient 
money to raise the average price of those products to the standard pro- 
vided for. I wish to call attention here to the fact that the issue of 
money by the Secretary of the Treasury would be in no sense and in no 
degree optional with him, but would be entirely of a mandatory character, 
and that any disobedience by him would subject him to impeachment. 
Mr. Murcii. Would that money be necessarily gold or silver % 
Mr. Bryant. No, sir. I regard the use of gold and silver for money 
as a mere relic of barbarism and as idiotic for the present civilization. 
There is no reason for it and no man can give any reason for it. All 
economists the world over are unanimous in agreeing that the value or 
purchasing power of money is fixed by the question of its own quantity 
and of the quantity of the uses which employ it. Hence it is sheer folly to 
speak of giving money some certain value by making it of any material, 
for whether it be made of the most precious material (gold) or the most 
worthless which the mind of man can imagine, its value or purchasing 
power in .either case must inevitably and absolutely depend upon its 
quantity and on the quantity of uses employing it. 

Mr. Murch. What do you understand by honest money % 
Mr. Bryant. The talk now-a days about " honest money," I regard 
as one of the greatest frauds that ever entered into the politics of this 
country. The men who have saitf that they wanted honest money 
have not been honest themselves. All men agree that the value or 
purchasing power of money depends upon its quantity, and on the quan- 
tity of uses for it. Hence it is evident that there can be no such thing 
as honest money unless by providing that the quantity of the uses for 
money shall govern the quantity of the money, and inasmuch as those 
men who talk so loudly about honest money have never made the slightest 
pretense to provide means whereby the money should increase as the 
uses for it increase, and thereby adopt the only possible means of giving 
money a constant value, it is evident that they never intended we should 
have honest money. What these men wanted in getting back to a gold 
basis was that we should have dishonest money, but as it would be 
fatal to their plans to tell the people that they wanted dishonest money, 
they very adroitly call it honest money. As I have before stated, any 
system of money that permits its exportation and importation is neces- 
sarily dishonest. Take gold, for instance. As it flows from Europe to this 
country (as it is now doing), the purchasing power of gold in this country 
is actually depreciating, while its purchasing power in Europe is ac- 
tually appreciating, so that we see that a money made of one and the 
same material is losing in its purchasing power in the country into 
which it is being imported, while it is gaining in its purchasing power 
in those countries from which it is being exported. These men want a 
fluctuating system of money. A fluctuating system of money is in favor 



DEPRESSION IN LABOR AND BUSINESS. 397 

of the intelligent far-sighted capitalist, and is oppressive and ruin- 
ous to all other classes. The capitalist foresees that there will be a 
contraction of the money (whether by law or by the exportation of gold 
aud silver) and immediately shapes his affairs so that his capital is put 
in the form of obligations calliug for dollars, as he knows that the con- 
traction of their quantity will constantly raise their value. His fore- 
sight at a later date enables him to see that the tide is to turn, and 
that the quantity of the money is to increase, producing a rise in prices, 
and he then shapes his affairs so that iustead of holding obligations 
calling for dollars, he disposes of them and invests iu property, to be 
sold in its turn when the highest tide of inflation has been reached. 

The Chairman. Have you any reason to believe that a legal-tender 
dollar,,such as we have in circulation now, is not an honest dollar? 

Mr. Bryant. A money that is made legal tender simply, is not nec- 
essarily honest money, nor can any money that is not a legal tender be 
honest money. Honest money must necessarily be a full legal tender 
for all debts, public or private, within the jurisdiction of the govern- 
ment that issues it. But that alone will not make it honest. The law 
must also provide for keeping its purchasing power at a fixed poiut, as 
I have before stated. The two things go together — its legal- tender 
quality and the permanency of its purchasing power. You cannot make 
a money honest by making it of any material whatever, nor by restrict- 
ing its issue to any one source. 

The Chairman. Is the legal-tender greenback such as we have now 
in circulation as honest money as a gold or silver dollar ? 

Mr. Bryant. The legal tender greenback which we have now in cir- 
culation is more honest than any gold or silver piece of money ever 
coined. And it is so for this reason : the greenback legal-tender money 
that we now have was made by society, solely in the interest of society, 
no man or body of men deriving any special benefit from it ; wliereas 
money that is made of gold or silver is in the direct interest of those 
who own the gold and silver mines of the world, and in the interest of 
the great capitalists who manipulate it. 

The Chairman. Is not the present legal-tender note honest money 
for the sole reason that it has the indorsement of the nation upon its 
back ? 

Mr. Bryant. I should say yes, and for the reason that it was issued 
for the sole benefit of societ}^. 

The Chairman. Do you believe in the necessity of the redemption 
in gold and silver of currency issued by the general government, in 
order to give it character % 

Mr. Bkyant. I do not. I believe that a monetary system which 
contemplates the issue of paper money to be redeemed in specie is the 
most pernicious system of money ever invented by man (and there have 
been many kinds). It is more than that, it is a great humbug. 

Views of Mr. ID avid J. King, 

Mr. David J. King came before the committee at its invitatiou. He 
stated in reply to preliminary questions that he is a resident of Boston, 
and has resided here for 17 years, and that his business has been hat 
and bonuet bleachery — the whitening and manufacturing of straw- 
goods. 

The Chairman. Are you largely engaged in that business? 

Mr. King. Not very largely; I employ sometimes 15 or 20 hands. 



398 DEPRESSION IN LABOR AND BUSINESS. 

The Chairman. Of course you have had, since 1873, many disas- 
trous results in your business f 

Mr. Kin a. My business, like every other business, has followed the 
general fortunes of the country. 

The Chairman. Has there been a very general depression here in 
manufacturing and mercantile pursuits for the last ten years'? 

Mr. King. Very largely so. 

The Chairman. When did you find it commence so as to make itself 
felt? 

Mr. King. In 1873, as nearly as I can recollect. 

The Chairman. And it continued until when ? 

Mr. King. In my business it continues until the present time. 

The Chairman. Your business is still in a state of depression 1 ? 

Mr. King. Yes, sir. 

The Chairman. State in a general way your conclusions as to the 
causes that produced that depression. 

Mr. King. I regard the depression as being almost entirely the result of 
financial mismanagement. Of course there are other causes; the intro- 
duction of labor-saving machinery is a factor. But the main cause, and 
the one to which all other causes are incidental, is the contraction of the 
currency. We had, as you know, a large volume of money at the close 
of the war, and that volume was largely contracted. 

The Chairman. We had some two thousand millions at the close of 
the war, including Treasury notes. 

Mr. King. Yes; that volume was very largely contracted. It is 
sometimes said that the contraction of the currency cannot have been 
the cause of our hard times because the contraction had ceased prior to 
1873. That is largely true, but the use of the money which had been 
withdrawn was supplemented by the bank credits, and thus we were 
carried along until 1873 by the use of private credit until the strain 
could be borne no longer, and in 1873 the weakest men or the weakest 
institutions went to the wall, and the consequence was a general finan- 
cial crisis. That continued until a year ago last May (and even after 
that), when we stopped the contraction of the money by stopping the 
destruction of the greenbacks. In my judgment the cause of the de- 
pression of labor and industry during that period w r as the contraction 
of the currency, and I will endeavor to describe the process by which 
the bad effect has been produced. Of course the moment you reduce 
the volume of money you increase its purchasing power. The moment 
you increase the purchasing power of money you reduce prices and you 
cause a loss to every man who is manufacturing goods. The raw ma- 
terial shrinks on his bands. He endeavors to save himself from loss by 
reducing the pay of his employes, and he does so so far as he can ; but 
from day to day the process goes on, the shrinkage in value continues, 
and the employer is forced to reduce the price of wages in order to save 
himself. A general paralysis results, from the fact that capital cannot 
be used profitably. Under our present institutions when capital can- 
not be profitably employed labor will be idle. It is impossible, of 
course, to continue contraction, the shrinkage of values, and the throw- 
ing men out of employment (thereby lessening their ability to resume) 
without producing very serious consequences on the whole community. 
The effect upon the labor of a country of contracting the volume of 
money can hardly be understood except by a student of finauce. The 
volume of money governs its value regardless of the substance out of 
which the money may be composed. Money does not measure value ; it 
simply actsas a common denominator of value; and as you reduce tb © 



DEPRESSION IN LABOR AND BUSINESS. 399 

number of dollars in circulation, you increase tbeir purchasing power. 
Our legislation for the last ten years has been such as to constantly in- 
crease the purchasing power of money, producing such conditions as to 
render the profitable employment of capital impossible, and, of course,, 
rendering it impossible to give employment to labor. This process will 
continue so long as the process of contraction continues, or until you 
reach hard-pan. Now hard-pan may be reached under a system which 
permits the use of gold, silver, and paper mouey, or under a system 
which permits only the use of metallic money, or of gold alone. If we 
had carried out the original idea of resumption, we should be on the 
road to hard-pan to day, and should not have reached it for some time 
yet, for the purpose was to effect the entire destruction of our green- 
backs and to reduce our system of currency to a gold basis. The con- 
traction stopped a year ago last May by Congress prohibiting the 
further destruction of our greenbacks. The same Congress authorized 
the coinage of from two to four millions of silver dollars per month. 
That, together with the large crops we have been able to export, and 
with the fact that Mr. Sherman was forced to recognize the greenback 
as a legal tender at the custom-house in order to carry out the proposed 
plan of resumption, together with another and still more important fac- 
tor in the case, viz, the large amount of money which remained idle and 
did not enter into circulation, and therefore had no effect on prices, has 
brought about an increase of values through an increase of the volume 
of our currency. In order that I may be clearly understood, I would 
like to say here that the cardinal principle on which all financial mat- 
ters rest is that the number of units in circulation establishes the prices 
in the country. When we are contracting a currency (as we have done 
in the past), the amount of money that is in actual circulation alone 
tends to fix the prices of our different articles ; but always, when we are 
contracting a volume of currency and increasing its value, there is a 
large, and as you progress a still larger, volume of money that remains 
idle, for the reason that as you increase its value or purchasing power 
it is profitable for it to remain uninvested. The best thing you can do 
with money in such circumstances is to put it into government bonds, 
or^ if you cannot do that, to bury it. The increase in its purchasing 
power consequent on contraction will increase its value more than the 
ordinary rate of interest. For that reason our currency for many years 
has been quietly withdrawn from business enterprises 5 for, if money was 
lent to a man in actual business life, the probability is that with the de- 
crease in value of the raw material, and with the increase of the pur- 
chasing power of money (which is constantly augmenting), he would 
lose his money aud become bankrupt. Now things are changed. Dur- 
ing all this period of contraction men were anxious to get rid of prop- 
erty for money, because it was money in which the increase was to be 
found. When the destruction of money ceased, its purchasing power 
ceased to exist. As Mr. Stevens once said, an unproductive dollar is a 
sore disturbance in a miser's pocket. So long as this process of con- 
traction went on, men could hoard their money and make a profit by do- 
ing it. When that ceased, then, in order to make money profitable, they 
had to put it in productive enterprises. Gradually this is being done. 
The increase of values consequent on all these acts (that is, on the stop- 
page of contraction, the coinage of silver, and the bringing into circula- 
tion the money which was lying unused in the vaults of the banks, and 
in private hands) has increased prices ; and to-day every one is quite as 
anxious to get rid of his money in exchange for property (as property is 



400 DEPRESSION IN LABOR AND BUSINESS. 

the thing that is now increasing in value) as he was anxious during 
this period of contraction to exchange his property for money. 

The Chairman. Do you include real estate in the use of your word 
property ? 

Mr. King. Yes; but the rise in value has not yet reached real estate. 
An increase in values is first felt in articles of daily consumption, and 
the last thing to be reached in the rise of prices is real estate. The in- 
crease of values, therefore, is only just beginning to be felt in real estate. 

The Chairman. Has it commenced % 

Mr. King. It has commenced. Property has been sold in this city at 
increased prices. It is a logical result of the basic proposition that the 
quantity of money determines its value that the present increase in 
the volume of money resulting from these causes, and an increase iu 
the quantity of money from the national banks, should produce increased 
prices. 

The Chairman. You speak of a commencement of better times in 
the general business affairs, as well as of increase of values iu different 
kinds of property, including real estate. How is it4n regard to labor \ 
Is labor in a progressive condition ? 

Mr. King. In labor, as in real estate, it is not felt yet. Wages are 
about the last thing that an improvement iu prices reaches. As yet our 
laborers are not fully employed, although there are many more employed 
than there were ; and, until business reaches a point where the laborers 
are all employed, and where competition commences, wages will not 
especially increase, although a larger number of men will be employed. 
When the manufacturer finds that his raw material is increasing on his 
hands, that his products are increasing in value, and that the sooner 
he gets his goods into the market, and that the more of them he gets 
the better, then he begins to be anxious to manufacture a larger amount 
of goods, just as many as he can find a sale for. The general increase 
of prosperity in the country which enables men to consume larger quan- 
tities of goods, of course allows the manufacture of more goods, and 
the upward tendency has precisely the contrary effect from what the 
downward one had. 

The Chairman. It appears that in the last four months there has 
been an unusual amount of gold imported into this country. State 
whether, in your judgment, that is going to be a permanent, lasting 
thing or not. 

Mr. King. Our importation of gold has been the result of the expor- 
tation of large quantities of wheat and corn principally (made neces- 
sary by short crops in Europe), and the importation of gold will con- 
tinue in all probability for some time to come. 
h The Chairman. Do you mean for years or for months? 
Wk i Mr. King. 1 should not undertake to state, except that it will continue 
so long as the present conditions exist of a demand for our cereals and 
other things which we have for exportation. I have no doubt that we 
are entering on an era of high prices, which will be followed by large im- 
portations, and by the withdrawal of the gold on which our currency 
largely rests. 

The Chairman. To come back to the labor question. Have the wages 
of labor increased in the same ratio with the improvement in industries 
and with the increased prices of commodities'? 

Mr. King. .No, sir; they have not; because, as I have said, labor is 
among the last things that an increase of prices reaches. As yet the 
laborers are not fully employed, and until they are fully employed there 



DEPRESSION IN LABOR AND BUSINESS. 401 

will be no competition in the labor market, and therefore no increase in 
wages. 

The Chairman. Then there is comparatively little, if any, increase 
in the price of wages now as compared with the last five years ? 

Mr. KiNa. Very little. The only improvement is that more laborers 
are employed. 

The Chairman. Is the improvement going to reach wages ? 

Mr. King. It certainly is. 

The Chairman. Provided this state of things continues. 

Mr. King. It must continue until a certain point is reached in prices, 
and long before that point is reached in prices labor will begin to have 
its comparative share in the improvement. 

The Chairman. Have you a surplus of labor in this city % Have you 
more men here than can find employment ? 

Mr. King. Yes, we have to-day. 

The Chairman. Then in that event this increase in the price of labor 
cannot be realized. 

Mr. King. Not until the laborers are fully employed. 

The Chairman. What do you understand by honest money ? 

Mr. King. I understand by honest money a money which is constant 
in its purchasing power — a money which will buy the same amount of 
produce, or hire the same amount of labor, in a year or two years from 
to-day that it does to-day. 

The Chairman. You do not discriminate, then, as to whether the 
money be coin or paper money? The idea is entertained that legal- 
tender money is not honest money because there is no time or place 
fixed for its redemption, and because it has no gold or silver for a basis. 

Mr. King. The only honest money that it is possible to have is a 
money issued by the government alone, possessing no intrinsic value, 
and maintained in such quantity as shall keep the relationship between 
money and its uses constant. 

The Chairman. How would you do this f 

Mr. King. I would replace our national-bank circulation by Treasury 
notes. I am not one of those who believe that the quantity of money 
is so very material. We should then have seven hundred and fifty mil- 
lions, or thereabouts, of legal-tender notes in this country. The prices 
of the great staple articles of the country are what they are because the 
volume of our money is seven hundred and fifty millions. You want a 
system which will keep the prices of fifty or a hundred of these great 
staple articles of the country just where they are. And I would do it 
in this way: I would have a commission (as Mr. Bryant has suggested) 
appointed whose business it should be to ascertain the current prices 
of fifty or a hundred of the great staple products of the country (as 
many as would be necessary to definitely settle the question). I would 
have that commission watch the loans and discounts of the banks, and 
know how much of the change in prices was consequent on the use of 
•credit and how much was consequent on the use of legitimate money. 
Then it should be the duty of the government to issue money (never 
contracting it — money should never be contracted) so as to keep the 
relationship between money and property alike — which would be dis- 
closed by the condition of prices. This ^would be an arrangement 
which would be almost automatic. The" prices would disclose the 
amount of money necessary to maintain equitable prices. 

The Chairman. Would you issue this government money on the 
credit of the nation alone, without haviug any specie basis for its re- 
demption, or any time for its redemption *? 
H. Mis. 5 26 



402 DEPRESSION IN LABOR AND BUSINESS 

Mr. King. I would issue it and make it absolute money, never redeem- 
able. I would make it a legal tender for all debts within the United 
States. 

The Chairman. Is it your opinion that incomes should be the sub- 
ject of taxation % 

Mr. King Yes : I favor a graduated income tax. 

The Chairman. Why? 

Mr. King. I believe that the burdens of government should be borne 
by those who are best able to bear them. 

The Chairman. You do not think that the producer should bear all 
the burdens of the government and that the consumer should escape ? 

Mr. King. As Mr. Bryant has explained, the producer really has to 
bear all the burdens of society. The millionaire today shifts his share 
of the burden on the producer. By a graduated income tax, when the 
property of a man who has $100,000 is taxed twice as much as that of 
a man who has only $50,000, then the richer man has got to go into the 
market in competition with a man who has not to pay such a tax upon 
his property. Therefore you get something out of the millionaire which 
to day be continues to shift on the producer. 

The Chairman. What are your ideas in regard to the question of 
protection in the way of a tariff! 

| Mr. King. I favor a protective tariff. With such a system of cur- 
rency as I should desire, a protective tariff would hardly bo necessary. 
An American system of finance would obviate to a large extent the 
necessity of a protective tariff. Then it would be an exchange of goods 
with an unexportable currency. 

Mr. Murch.. Do you want to bring our labor into competition with 
European labor? 

Mr. King. No ; but that very fact would prevent it to a large extent. 
It would be necessary, of course, even then, to protect certain indus- 
tries ; but the very fact of having a non exportable currency would pro- 
tect very many industries that are not protected now. With a metallic 
system of money (as I explained a few moments ago), other countries 
can sell their goods to us and take our money in payment, -but under a 
non exportable system of money they would be forced to exchange goods 
for goods. It was necessary to protect our infant industries by means 
of a tariff, but it is by no means necessary to have so large a protective 
tariff or to have so many articles protected as we have today. 

The Chairman. Y r ou employ men and have been employing them for 
years, so that you are practically acquainted with this question of labor. 
In your judgment^ what ought to be the number of hours to constitute 
a day's work % 

Mr. King. That is rather a difficult question to answer. If a law could 
be so framed as to apply to every State in the Union, making eight hours 
a day's labor, that law, under the existing system, would be a benefit to 
the laboring classes. But I favor a change of system, and I should 
look for an improvement in the condition of the workingmen rather by 
the changing, radically, of our present industrial system than through 
any attempt to control the hours of labor under the existing system. 

The Chairman. If a rule could be applied to all of the States, you 
would favor the limitation of labor to eight hours a day % 

Mr. King. If that is the best we could do, I should favor it j but I 
think we could do better 

The Chairman. Congress enacted a law fixing ight hours as a day's 
work in all the government shops. Of course that law can only apply 
to the employes of the general government. Congress has no control 



DEPRESSION IN LABOR AND BUSINESS. 403 

or power over ii State to say what shall be the hours of labor in any 
State, but Congress has the control in regard to the government shops. 
Those of us in Congress who favor the idea of the eight hour law enter- 
tain the notion that that law would be an example which the State legis- 
latures would be likely to follow. Therefore I ask you, in a general way, 
for your opinion as to what should constitute a day's labor ? 

Mr. King. I am in favor of the reduction of the hours of labor as far 
as possible. Under the existing system, the laborer is treated (and it 
is the fault of the system, not of individuals) very much like a machine. 
He gets what would keep him in good running order as a whole, and he 
gets nothing more. 

The Chairman. That is, in good times 2 

Mr. King. As a rule it follows in good times and in bad times. He is 
a little better off iu good times than he is in bad times. But the effect 
of our system is to give the laborer only what will keep him in such con- 
dition as will make him most profitable to the employer. Therefore 
a law that will give the laborer more leisure and more education will 
effect an improvement in his condition. In that view of it — so far as 
the eight-hour law applies to government employes — I should favor it. 
Iu my remarks earlier, however, I stated that I thought we should work 
on a different system, and that more good could be done in some other 
way. 



Boston, Xovember 5, 1879. 
Views of Mr. Horace Binney Sargent. 

Mr. Horace Binney Sargent came before the committee at its in- 
vitation. He stated, in reply to preliminary questions, that he is a resi- 
dent of Salem, Mass. ; that he has resided there for some years ; that he 
was born iu the State of Massachusetts and has lived in the State more 
than fifty years. 

The Chairman. What has been your occupation generally? 

Mr. Sargent. I was bred to the bar, but I have been engaged chiefly 
in managing my own estate — principally real estate. 

The Chairman Congress has appointed us a committee to inquire 
into the causes which have produced the depression in the industries 
and labor of the country, and to recommend (if in our power) some 
means by which such depression can be prevented in future. Give us 
your opiniou as to the causes which produced the depression iu the in- 
dustries and labor of the country. 

Mr. Sargent. My own strong opinion is that the cause has been the 
tampering with the currency — the changing of the measure of value. I 
believed that the change of policy which was particularly formulated in 
1869 — the credit-strengthening act of March 18, 1869 — was a fair ex- 
pression of a policy which has been disastrous. It seemed to me that 
if the bondholders had claimed $700,000,000 more than we were bonded 
to pay (that is, if they had demanded the difference between coin 
and paper), that would have been a trifling thing, because 'the United 
States could pay and did pay before 1873 $700,000,000 without any dif- 
ficulty. But the indirect mode in which it was done was the cause of 
the trouble. It changed the measure of values. It was enacted by that 
statute that the bonds should not be paid until the greenbacks, the 
United States Treasury notes (then at about 70), should be equivalent 
with coin. That compelled a change of measure of every dollar of debt in 



404 DEPRESSION IN LABOR AND BUSINESS. 

the country, and there being $ 12,000,000,000 or thereabouts of debt, it was 
adding 30 per cent, of that to the whole. My opinion was strengthened 
by the fact that in 1870 the Supreme Court of the United States, in its 
second decision, 12 Wallace, used language of this sort in regard to a 
proposed change of paper obligations to coin obligations: " Debts have 
been contracted since United States Treasury notes have been declared 
to be a legal Render, and in reliance on that declaration legal-tender 
notes have become in fact the recognized measure of values. If now, 
by our decision, it be determined that the United States Treasury note 
cannot be received for that object, but that debts are payable in coin, 
the government has become the instrument of the grossest injustice. 
Such a percentage will be added to every debt, and debtors will be 
bound to pay such obligations as they never have assumed, that univer- 
sal bankruptcy must ensue." Then the court adds, " These consequences 
are too obvious to admit of question." 

The Chairman. Was that the case where the Supreme Court decided 
that the issue of legal tender currency was a war measure? 

Mr. Sargent. No ; this was the decision in the second of the legal- 
tender cases (Knox against Lee). Judge Strong delivered the opinion. 
It was a very remarkable expression on the part of the court, and it 
seemed to quadrate exactly with all that had been stated by John Sher- 
man Ben. Wade, and all the rest, prophetically. I think that if the 
bondholders had been content with merely taking seven hundred millions 
from the people, that would have been a trifling matter; but to add 30 
per cent, to the measure, and to say that they would not take payment 
for their bonds until that was done, and pledging the United States' to 
do that, was, as I said before, adding 30 per cent, to every debt, public 
and private. 

The Chairman. And that you conceive to have been the leading 
cause of our troubles % 

Mr. Sargent. I believe it was. Whenever there has been a very 
large amount of paper issued in this or any other country, and when it 
has filled the veins of enterprise full, acting as money (although only a 
promise to pay), destruction has come whenever an attempt has been 
made to reduce it to the limited amount of gold and silver available. 
I think that in our own case there was another very disastrous 
thing done, although its effect perhaps was not so apparent in other 
respects. That was that after we determined that we should resume, 
and that we had a right to resume iu gold and silver, we then demone- 
tized silver, thereby adding 50 per cent, to the weight of our obliga- 
tions, inasmuch as we had the double reservoir to draw on in the one 
case, and we reduced it to the one reservoir. I think that those two 
things (meaning the same thing — to pay the bondholder everything 
he could get, and to leave the soldier, sailor, mechanic, and farmer 
stranded on the shore) caused it. As a soldier, I found it particularly 
wrong to repudiate the contract under which the soldiers were paid. 
The greenback was inscribed, u This is a legal tender at its face value 
for all debts, public and private." 

The Chairman. Were you a soldier in the late war ? 

Mr. Sargent. Yes; I commanded the First Massachusetts Cavalry at 
first, and afterwards a brigade of cavalry in the Army, of the Potomac. 

The Chairman. You are the commander of the Grand Army of the 
Republic in this State ? 

Mr. Sargent. I was for three years successively, but at the last 
election I declined serving again. I have watched the fall of estates 
very carefully, keeping pace with the rise in the paper money. The two 



DEPRESSION IN LABOR AND BUSINESS. 405 

things have kept puce with each other; real estate has fallen, and labor 
has fallen just as the value of greenbacks has risen, with the exception 
that once or twice there were peculiar exceptional reasons which caused 
a little fluctuation. For instance: immediately after the war we felt 
that we were out of the woods, and so the holder of greenbacks was in 
a much more hopeful condition than he was a little while afterwards. 

The Chairman. What is your opinion as to tbe character of the legal- 
tender currency of the country as a substitute for the currency which 
we had been in the habit of using heretofore ? 

Mr. Sargent. It seems to me that the legal-tender currency worked 
admirably well. It did everything in the way of the office of money that 
was wanted, and it was only prevented from doing the whole that was 
desirable by being useless for two things — for the payment of duties at 
the custom house, and for the payment of interest on the public debt. 
I suppose that the manner in which the money was emasculated is very 
natural. The men who loaned it simply said " We want gold and silver 
for the interest of our money, and in order to get gold and silver we 
must insure its flow into the country, by providing that paper money 
shall not pay duties on imports. We then get the gold lor interest. 7 ' 
We provided the fund by these two acts. Thus were introduced as ex- 
ceptions to the contract on the back of the legal-tender notes the pro- 
visions that they should not be legal tender for duties at the custom- 
house or for interest on the public debt, and those exceptions made that 
money less valuable. Had it not been for those exceptions, I see no 
reason to think that the legal-tender money would not have done ex- 
ceedingly well. Of course a great mass of it being issued, it would 
follow the ordinary rule of money, that all commodities (gold and silver 
iucluded) would be dearer as the mass of paper money increased. But 
we should have got entirely out of that and grown up to par with per- 
fect ease if we had done anything like what the Freuch nation did — 
that is, preserve labor. I have thought that Mr. Webster's admirable 
expression, delivered thirty-nine years ago at Saratoga, that " the labor 
of the United States is the United States," has been entirely changed, 
and that the expression now would be, that " the bondholders of the 
United States are the United States." 

The Chairman. Then you do not consider that the legal-tender dollar 
is an honest dollar % 

Mr. Sargent. I have this doubt about the constitutionality of making 
a legal tender a promise to pay. I believe that the United States had 
entire power to stamp the legal tender decree (the statutory agreement of 
the people) upon any material, tin, zinc, copper, nickel, silver, gold, 
paper, or anything else, and that the whole value was the agreement. 
In olden times the beaver-skin passed as money, simply because the 
people agreed to take it as representing a certain value, and not because 
the beaver-skin was of that value. The fact that ±Y2\ grains of silver 
passes as a dollar while 420 grains only passes as ninety cents, is almost 
demonstrative of the fact that the United States can by its fiat, its 
decree, its statutory agreement, give a value to any commodity inde- 
pendent of the intrinsic value of that commodity. I know very well 
that if gold were demonetized throughout the world we should see at 
once that its real value was because it had been made money by law, and 
that it is not of any use as a metal, but is one of the poorest metals in 
the world for any purpose except adornment. 

The Chairman. In your opinion, have we legal-tender currency 
enough to meet the necessary wants and demands of the trade of the 
country % 



406 DEPRESSION IN LABOR AND BUSINESS. 

Mr. Sargent. I cannot imagine that any man can estimate the amount 
which we do require, except empirically. I have thought (and I have 
found it a good illustration) that society was very like a tree growing. 
When the sapling is an inch in diameter, the growth of the ring is only 
three inches in one year, but when it is five feet in diameter, force rnusi 
be added to its principle of growth to make a strip fifteen feet around; 
and so I have thought that the increase in the need of money was in an 
arithmetical ratio. If a tree should be growing, and a man should come 
along and say, "We have got too much sap in this tree; I knew that 
tree when it was a sapling ; it is now getting hogsheads of sap where it 
used to have gallons ; the tree is on a drunk; you have got to withdraw 
the sap;" you would say to him, "What do you mean?" But if he should 
be too strong for you, and should laugh at your idea that every leaf 
must not merely support itself, but must also provide additional sap for 
the leaf of to-morrow, and he should say, " I am going to stop this flow 
of sap; we want something condensed;" and if he should put in a 
syphon and draw off the sap, the tree would die gradually, and after it 
had been cut away (an excellent job for those who wanted fire-wood, but 
bad for those who wanted shade), he might triumphantly say, "There, 
you see there wasn't sap enough. Look at that tree, pouring out sap, 
which it could not use, from the trunk." That illustration applies to the 
use of money. The money has been hoarded in banks, because there 
was no use for it legitimately; because we destroyed its use. In specu- 
lating on the matter I have not seen my way exactly clear to see why, 
if we consider one commodity, like gold or silver, requisite as a repre- 
sentation of money, all property might not properly have the same 
representation. The ordy difficulty would be to fix on the true value 
and to avoid a wild-cat valuation. 

The Chairman. Do you not think that the legal-tender currency, 
backed by the credit of the country, is as good as a bank-bill where there 
is a specie basis to maintain it? 

Mr. Sargent. Better; much better. ' I am perfectly willing to admit, 
for argument's sake, that paper money must be redeemable, if you 
choose. If it is redeemable, the nation is vastly better able to avoid a 
corner than any corporation can be. But I do not believe in the specie 
basis at all. I believe that the specie basis is an utter fraud and a pure 
superstition. I think that destruction has so invariably followed the 
attempt to redeem a paper currency, that it is inseparable from it. That 
is perfectly natural, because we do not make the distinction between 
representative paper and substitute or additional paper. We bring 
paper money into existence and life because we haveu't got gold and 
silver enough to go around. In the city of New York, for instance, the 
amount of exchanges in a single year reaches $21,000,000,000. Of course 
a very small part of that exchange is effected with gold and silver. 
Gold and silver do not exist to such an amount, and therefore paper is 
needed. That is not representative paper, but is supplemental or sub- 
stitute paper.. It strikes me as infinitely absurd that when we admit 
we must have paper in addition to gold and silver, we should attempt 
to redeem in a non existing commodity that which is called into exist- 
ence because the commodity does not exist. 

The Chairman. What, in your opinion, as a judge of the value of 
real estate, has been the shrinkage in real-estate values during the 
last seven years, commencing with 1873, in consequence of the contrac- 
tion of the currency? 

Mr. Sargent. The contraction was from two causes — the act of 18G9 y 
which determined to redeem in coin, and thereby added 30 per cent, to 



DEPRESSION IN LABOR AND BUSINESS, 407 

the greenback as a measure of value — and then the act of 1873, demon- 
etizing silver, which act, when we were attempting to resume, made it 
impossible for us to resume by diminishing one half the stock of coin. 

The Chairman. And this subsequent legislation, destroying the legal- 
tender currency, which was afterwards stopped by recent legislation '. 

Mr. Sargent. That, I think, was infamous. I understand that in 
the city of Boston the reduction of the assessor's valuation within a few 
years is, in real estate alone, little short of $125,000,000. A single piece 
of property of mine, which has been taxed at $203,000, and for which I 
was offered $400,000, and which the park commissioners of the city of 
Boston recommended the purchase of at $203,000 (which offer I directly 
refused ), is now taxed at $00,000. It was mortgaged for nearly $ 100,000, 
and was sold for the mortgage, but did not bring the amount of the 
mortgage at the sale. 

The Chairman. Is that a fair test of the shrinkage of values in this 
city ? 

Mr. Sargent. I think there are cases of very much greater shrinkage 
than that, but I. also think there are a great many cases of much less 
shrinkage. I mention that as a particular remarkable case within my 
own knowledge. In another case, an estate that was taxed at $45,000, 
did not bring the amount of its mortgage. It only brought $15,001) at 
auction. In another case, an estate that was taxed at $84,000 brought 
only $56,000. In Newport, R. I., I had au estate where all my sales had 
been at the rate of $2,000 an acre. There were 80 acres in it, which I 
supposed to be worth $100,000, and it was taxed for about $40,000. 
That estate was sold in the same way for a little over its very reduced 
mortgage — about $15,000. This 80 acres in the city of Newport sold for 
$15,000. All my previous sales from the same estate had been at the 
rate of $2,000 an acre. In fact real estate has had no value whatever. 
It has been utterly unsalable. 

The Chairman!! For how long has that been the case ! 

Mr. Sargent. Real estate was unsalable from about 1875 to the end 
of 1878, aud even now it is unsalable in one sense. The prosperity of 
to-day is merely the prosperity of the third Barmecide in the story — a 
man who stole his barrels ready made. Railroads, manufactories, houses, 
and lands have all gone into the hands of mortgagees, and they find 
that at the reduced rate at which they bought them they can make a 
comfortable interest on the money. 

The Chairman. Has there been any perceptible change within the 
last year in the value of real estate "? 

Mr. Sargent. They say that real estate is moving somewhat. I see 
that there are some changes. I have no doubt that some people are 
terrified at the lookout, and are therefore making investments in real 
estate. All that seems to me the legitimate aud direct cause of what 
I set out about explaining as the true philosophy of mouey. The infla- 
tion by gold coming into the country is at present enormous. The in- 
flation by banking issues is very considerable, but the depreciation in 
prices has caused one dollar to go as far as two dollars went before. If 
there be a movement in real estate I do not think it has been at very 
high values, but I believe that all such movements are the result of the 
increase Of money, and the let up by those who have had an interest in 
retaining values, and who have got their bonds under cover by the re- 
funding act. I think that 'that was their object, and that having at- 
tained it, they care very little* indeed whether the greenbacks shall be 
received at the custom house, for which we have always begged, and 



408 DEPRESSION IN LABOR AND BUSINESS. 

which they refused. They have made their market, as the French girls 
say, and they are satisfied. 

The Chairman. But still, in your judgment, there is an upward tend- 
ency generally ? 

Mr. Sargent. I think so, but it is not marked in real estate. I have 
not myself received a single application for any property that I have. 
I hear from brokers that there is a movement in real estate, and I hear 
that men are going into real-estate operations, and I observe that- there 
is an immense stock speculation, such as has never been thought of be- 
fore, and that certain stocks have gone up very high. 

The Chairman. To what do you attribute this spasmodic rise in the 
stock market? 

Mr. Sargent. I think it is on account of the great influx of gold into 
the country. We have reduced our own calls on all foreign countries 
very much, and are able to compete with the pauper population of for- 
eign countries by our own labor; so naturally we export less gold, and 
the gold comes back here. The gold inflation is a very important part. 
We have insisted that an increase of the volume of money would in- 
crease prices, and that a diminution of the volume of money would di- 
minish prices. That increase of the volume of money has come now 
through the enormous influx of gold and also through the increase of 
illegitimate paper money by corporation promises to pay. 

The Chairman. I suppose that our exports of home products have 
had something to do with it 1 

Mr. Sargent. That has changed the balance of trade somewhat. I 
think that our vast harvests (with which resumption has had nothing to 
do) have been the reason why we have not been stranded in the at- 
tempt to resume. Resumption does not amount to anything. Mr. 
Webster said that specie resumption meant the conversion of paper into 
gold as soon as the paper touched the counter of the bank that issued 
it. But now they give us paper money which they say is good (national- 
bank bills) because it is based on other paper money (greenbacks) which 
they say is bad, and if we undertake to get gold on this paper money 
we find immediately that we can only get another kind of paper money 
for it, and then when we bring that other paper money to get gold on 
it we find that we cannot get gold for it in less quantities than $50. 

The Chairman. Do you believe that there is any substantial and 
sound reason existing for the rapid increase in railroad, mining, coal, 
and other stocks in the stock market ? 

Mr. Sargent. I think that many of these increases come in ail times, 
from hope of better times rather than from a real improvement. Men 
have been led to believe that there has been an unsound financial policy, 
and that now we have reached hard pan, and are going to boom. There 
is the same sort of movement now as th^re was just after the war, and 
men are buoyed up with the idea that we are entirely out of the woods. 
Why? Because of the fact that we have had such an immense harvest, 
and that there has been such a demand abroad for our products. Vast 
quantities of gold are coming to us, as shown by the fact that Germany, 
France, and England are all in trouble about the drain of gold. But I 
look with very great dread (and with a certainty too) to the time when 
the returning wave (the opposite to that which brings in that mass of 
metal) will carry it out again, and will leave us with an enormous^ ex- 
panded paper currency on hand requiring redemption in an insufficient 
specie basis, and I am afraid that we shall have a worse condition than 
we have had already. 

The Chairman. And that may occur at any time ? 



DEPRESSION IN LABOR AND BUSINESS. 409 

Mr. Sargent. It may. I think that we never were in a more dan- 
gerous time than we are in to-day, because it seems to me that the de- 
mand for money for various legitimate and illegitimate uses will be so 
great that bauks will take advantage of the limit law which they have, 
and by which now they can make bank paper up to the limit of the 
whole public debt. I am afraid that the national-bank notes, redeema- 
ble in legal tender, which is constantly getting diminished, or is being 
withdrawn in some incomprehensible way, or in gold and silver which 
are likely to go out of the country, will bring us to the same confusion 
which we have had many times in this country, and all from the same 
cause, viz, that the supplemental money is treated as if it were repre- 
sentative money, the supplemental paper money being issued because 
there is not enough of gold and silver. 

The Chairman. What is your opinion in regard to the policy of per- 
mitting national banks to issue bills ? 

Mr. Sargent. It seems to me that, constitutionally, it is absolutely 
wrong, although it is to be supposed that our fathers knew what they 
meant to provide in the Constitution, and they very early gave the power 
to banks. Still, I have never been able to see that there is any mistake 
in Judge Story's or in Mr. Webster's argument — that if the United States 
had not the power to issue paper money themselves, they had no power 
to delegate that right. I believe that the policy of allowing corpora- 
tions (which only have a limited hold on the wealth of the country) to 
issue paper money as compared with the policy of issuing redeemable 
money by the nation, which has the right of eminent domain, is entirely 
wrong. 

The Chairman. But the principal object of my question is whether 
the legal tender currency is not a better currency for the country than 
the bank currency is, and whether it would not be advisable to compel 
the national banks to retire their notes and let the government alone 
issue paper currency. 

Mr. Sargent. Decidedly so. I have no question of that at all. I 
have the most confirmed and positive opinion of that. There is one con- 
sideration in favor of it, which is not a small matter either : that is in 
regard to the chances of counterfeiting, and the chances of having worth- 
less wild cat money passed over to us, and having so many banks which 
we know nothing of in distant places issuing money. It is vastly better 
te have a more elaborate and difficult uncouuterfeitable United States 
note, uniform iu design, and then issue these notes to the banks (with, 
their own headings, if you please), so that the banks shall be banks of 
deposit and discount. But the money should be issued by the govern- 
ment and not at all by the banks. I have believed that thoroughly. I 
wonder very much indeed that the Democrats generally throughout the 
country have not adopted our theories as perfectly consistent with their 
own and Andrew Jackson's. Andrew Jackson said that he wanted hard 
money. Why did he want hard mouey ? Because he knew that hard 
money could only be issued by the government, and that if he could only 
confine the circulation to hard mouey he could put out the pipe of the 
banks. They could not issue paper. That is the very thing that we 
want to-day. Only we have learned something about paper money which 
Jackson did not know. Our reason for preventing the issue of paper 
money by the banks is the same as his was. 

The Chairman. The sovereign power of the country can put its own 
stamp on paper, gold, or any other material ? 

Mr. Sargent. I think that when we look at the legal tender act as 
being a statutory agreement, the paper money rests on exactly the same 



410 DEPRESSION IN LABOR AND BUSINESS. 

footing as our personal security in walking the streets rests on. We go 
through the streets on the assurance that we are not to be robbetl or 
murdered because we have agreed in common with all citizens that rob- 
bers and murderers shall be hung or imprisoned. And so, in like man- 
ner, the legal-tender currency is simply a statutory agreement that we 
will take a certain thing in exchange for all commodities, and we take it 
because we know that it can be passed off. 

The Chairman. Secretary Chase made use of the remark, in connec- 
tion with a legal tender currency, that he was cutting up the credit of 
the country into slices and was spreading it broadcast. 

Mr. Sargent. If redeemable money is to be issued, then the power of 
eminent domain makes the government the proper source of its issue, 
but I do not believe in redeemable money at all. I believe that the 
power and credit of the government and the agreement of the people 
among themselves collectively is the real basis of paper money. 

The Chairman. In your opinion, have we at this time enough legal- 
tender currency to provide for all the wants and necessities of trade ? 

Mr. Sargent. I cannot believe that we have nearly euough. I think 
that if the object is to make money hard, that is, difficult to get (and I 
think that sometimes the hard-money people mean that), we perhaps 
have too much. But if the people are interested in making exchanges 
easily I do not know where the limit would be. But it has struck me 
that a constitutional amendment providing for an increase of currency 
in a certain way, and perhaps an issue annually in proportion to the 
amount of the taxes, would be a method of keeping it always going. I 
think that money must not only never diminish but that it must be con- 
stantly increasing, because the uses for it are getting larger. 1 do 
not know that an increase of currency in proportion to population 
would be at all sufficient. No nation has ever tried the form of money 
which the greenbackers propose, that is, a money which is not occasion- 
ally in danger of being shrunk by a forced contraction, but a paper 
money issued to facilitate exchanges and necessarily growing in quantity 
as the exchanges grow, for money will breed money, and exchanges will 
make the necessity of breeding money. 

The Chairman. Turn your attention to the question of an income tax. 
What idea have you formed on that subject ? 

Mr. Sargent. I have formed the opinion strongly that although an 
income tax may be somewhat odious (for it is, perhaps) and difficult to col- 
lect, it is absolutely essential to our form of government, and quite consist- 
ent with constitutional provisions that there shall be a tax on incomes 
so as to make taxation really equal and proportionate. Every man 
should feel the pinch of taxation or else no man should feel it. To say 
that a man with an income of many hundred thousand dollars shall pay 
the same percentage of taxation as a man with almost nothing, and one 
who has to go without his dinner when he pays his taxes, is not in ac- 
cordance with republican ideas of equality and proportion. We have got 
to give a new meaning to equality and proportion, and I think that an 
income tax is perhaps a very good way to do it, especially in connection 
with the infamous surrender by the United States of the right to tax 
bonds. So far as that touches this question, I would say that from all 
I can learn, the States have never been permitted to tax the United 
States securities — for one good reason, lest they should overtax them, 
so that the United States could not raise money. But I never heard, 
until the bondholders became the United States and ruled the govern- 
ment, that the United States itself could be estopped from taxing 
its bonds. • The very reason why the State should not. tax United States 



DEPRESSION IN LABOR AND BUSINESS. 411 

securities, is the reason why the United States should not abandon that 
power. That power is as inalienable as the power of making wars and 
making- treaties, and I hold that to be a thing which, if it could get be- 
fore the courts, could not fail to be considered an unconstitutional 
abnegation of power. 

The Chairman. While Congress may not have the power to tax the 
bond as a bond, it has the right to tax the income of the bond. 

Mr. Sargent. That may be, but at the same time the language is 
fearfully strong in the refunding act, in which it is provided that those 
bonds shall not be amenable to taxation under the United States or 
under any State or municipal power whatever. That is a very broad 
expression; and was intended, I suppose, to cover everything. But if 
it does cover the matter so far as to prevent the United States, in case 
of pestilence or being attacked by the armies of the world and being 
reduced to the lowest point, from raising a dollar of taxation out of two 
thousand millions of property, I believe it is an utterly unrepublican 
and unconstitutional provision. 

The Chairman. State whether in the payment by the government of 
the soldiers of the United States there has not been a discrimination 
against them as compared with bondholders. 

Air. Sargent. Decidedly so. There has been a decided discrimina- 
tion against the soldiers. In the early part of the war the soldier was 
hired for gold and silver. His recruiting papers promised to pay him so 
many dollars a month in gold and silver, and he was paid in gold and 
silver up to a certain time — up to 18615, when the legal-tender act was 
passed. After that time, he was paid in paper, but the bondholder was 
still paid in gold according to the contract that he should have his in- 
terest paid in gold. The soldier was certainly entitled to as good treat- 
ment as the bondholder. The United States have since said and the 
bondholders have declared that equity demanded that the bondholder 
should be paid his principal in gold, although the Treasury note paid to 
the soldier distinctly declared that the principal of the bond is payable 
in paper. Now, the soldier was paid in a currency so depreciated that 
$1,000 paid to a regiment would not buy a thousand dollars' worth of 
bonds, while $1,000 paid in interest to the bondholders would buy at one 
time $2,400 worth of bonds ; and since that time the principal of the 
bond has been declared payable in coin, although the holder got it at 
the rate of 35 or 40 cents on the dollar in paper. There is a great move- 
ment going on through the country to equalize that. Petitions are 
being circulated and signed in this State and throughout the West and 
elsewhere, calling the attention of the government to the fact, and ask- 
ing that the soldiers shall be paid as well as the bondholders, because 
the soldiers were paid under duress. One objection to that has been 
that contractors and civil officers might require the same sort of pay- 
ment, but that objection does not apply. They could make their own 
contracts. They were free. The soldier who was in for three years 
could not make any objection. I have had soldiers come to me and say, 
"Am I bound to serve the government when it pays me in paper, which 
will only buy one-third of what the gold which 1 was promised to be 
paid in would buyf The answer was of course unsatisfactory. The 
soldier knew that the guard-house and the buck and gag were the only 
answers he would ultimately get. 

The Chairman. Then the amount of it is that while the bargain made 
with the soldier was that he was to be paid in gold, he has been turned 
off with greenbacks, but though the contract made with the bond- 



412 DEPRESSION IN LABOR AND BUSINESS. 

holder was that he was to be paid in greenbacks, he is now to be paid 
in gold i 

Mr. Sargent. Precisely. I wish to say a word in regard to the policy 
of the government as to the slave. The policy of the bondholder to 
preserve his own interest entirely, and to neglect every other interest, 
has been manifest in this manner. We made a war for the slave. We 
filled the nation with stones in regard to the wrongs done to the slave. 
If there were these wrongs done to him (and undoubtedly there were), he 
deserved a certain amount of redress, and merely to stop knocking him 
down was not a compensation for having knocked him down before. 
But when the war was ended we forgot all the/wrongs that required any 
redress. The attention of the nation was directed to the disloyalty of 
the masses, and we befogged the nation a little by saying, " The owner 
is disloyal, and therefore we will not pay him for his slaves," the real 
object being not to increase the national debt by paying the master and 
forgetting entirely that the real owner of the slave was the slave him- 
self. 

The Chairman. Be kind enough to state your views and opinions 
with reference to the propriety of the government limiting the hours of 
labor of its employes. 

Mr. Sargent. My opinion is that such a law should be passed be- 
cause labor-saving machinery throughout the country and throughout 
the world has decidedly changed the relations of the laborer to his work. 
It seems to me that labor-saving machinery is a boon of God to man in 
order to undo the original curse a little, that " In the sweat of thy face 
shalt thou eat bread." But that has been changed by those who have 
owned labor-saving machines to mean something else — to mean that " In 
the sweat of thy face shall another man eat cake." I think that the 
laborer is, in regard to the labor-saving machine, as if it was an im- 
mense slave, the product of natural powers, and that the Almighty was 
addressing every man who toils somewhat in these words : u Here is a 
slave of enormous power, knowing no hunger, no thirst, no fatigue. We 
give him to you to enable you to spare your muscle and not to 
feel fatigue." But the gift has been misused entirely, so as to keep 
the laborer as closely at work as ever before in competition with 
that which knows no fatigue. It is like putting a man to striking 
an anvil in competition with a trip hammer which never stops to 
breathe. I think that eight hours is abundantly sufficient for work, and 
that longer hours of labor only tend to gluts in the market. I think 
that eight hours are probably even more than we shall ultimately find 
necessary, and that if all labor and labor-saving machinery were con- 
stantly kept at work eight hours in the day, we would find ourselves 
something in the condition of the Connecticut man who invented ma- 
chinery for turning out ten million pills a day, but the difficulty was to 
find people to take the pills. I think that the government should set 
the example of an eight-hour law, and I tjiink that then other employers 
will necessarily follow it. I think that labor-saving machinery makes 
it essential that there shall be some new division between capital, labor, 
and time, I cannot but think that ultimately the laborer will have his 
half day's rest very much as the banker and the merchant have it. I 
recollect when merchants and bankers worked from sun to sun and when 
they staid late at night in their office, but now they find that there is no 
necessityfor that. Ithink that thatis to be the caseinregard to the whole 
world, and that that will do away very much with the necessity of em- 
ploying children at wretchedly low wages. Children are now employed 
in many places at low wages because their parents demand too high 



DEPRESSION IN LABOR AND BUSINESS. 413 

wages. If we should limit in some way (and an eight-hour law is get- 
ting towards it) the expenditure of labor so that the productions of the 
world should be enough and not too much, there would be no necessity 
of employing children, and the laborer would have a good deal more 
time to himself than he has now. I think that the division of capital 
and labor is promoted by the eight-hour law, and that we must come 
to it. 

The Chairman. You think that by limiting the day's labor to eight 
hours, employment will be afforded to more men ? 

Mr. Sargent. Very much more. There is not enough work to go 
around if men are employed twelve hours, and in fact there is not enough 
work to go around now if men are employed eight hours. Through 
labor-saving machinery we have got into some mistake about the mass 
of productions that we are making. We are over-producing by over-tax- 
ing labor. That, I think, is the difficult}' of over-productiou. 

The Chairman. There is a difference of opinion among witnesses who 
haVve been testifying before our committee as to whether labor-saving 
machinery has been an advantage or a disadvantage to laboring men. 
Mr. Carroll D. Wright, who was examined before this committee in the 
last Congress, took the ground (as others did) that labor-saving ma- 
chinery is beneficial to labor because it increases productions and aids 
in that way to give employment. 

Mr. Sargent. I am not surprised that Mr. Wright should be on that 
side. I think that labor-saving machinery is intended to be an immense 
benefit to the laborer by saving his own muscles, but I do not think that 
the laborer gets the benefit from it. He strains his' muscles just as 
much. He is put in competition with a giant, a slave who never tires. 
There is undoubtedly a benefit to the laborer in getting material cheap, 
but we must not overlook the fact that somebody has to make that 
material cheap, and that means low wages to somebody. I used to 
listen very attentively in old times to the Democratic argument against 
the tariff. The question was generally asked on the stump, u are you 
going to pay $2 more for your shirt in order that that man on the hill 
who owns the manufactory may ride in a carriage ?" u 'Eo, v they said, 
"we will not do it. We can get them cheaper abroad if we can only get 
the English goods in." And the consequence was that Congress got to 
tinkering with the tariff law and shut up the mills in this country that 
employed a man and his children 300 days in the year. 

The'CHAiRMAN. And then the price ofthe English shirts went up ! 

Mr. Sargent. Exactly. 

The Chairman. But when there was competition here, that was a 
regulator of the price J ? 

Mr. Sargent. Yes, I think that there is only one rule, and that is the 
one expressed by Mr. Webster, u that the labor of the United States is 
the United States"; and if a man always thinks of what will conduce 
to the greatest contentment, the greatest prosperity and greaest general 
wealth of the masses, he will find that things shape themselves clearly for 
him, aud that his own investments, however great, are made secure and 
permanent, because they cannot be disturbed even by an earthquake 
without that same earthquake disturbing the foundations of the security 
of every other man. If every man had a household, however small, 
he would not be likely to disturb investments in property of that kind. 
I think that it is the interest of all classes of the community to give to 
the laboring classes the greatest compensation, and to make them work 
with as much ease as possible ; but labor-saving machines are the natu- 
ral tendency, the ultimate intent being the general establishment of 
justice throughout the world. 



414 DEPRESSION IN LABOR AND BUSINESS. 

Yieivs of Mr. John L. Butler. 

PtMr. John L. Butler came before the committee at its invitation. 
He stated in reply to preliminary questions that he is a resident of 
Somerville, near Boston ; that he has been practicing law for the last 
eight or ten years, and has been interested in the oil business. 

The Chairman. Having been actively engaged for several years in 
the oil business, I suppose that you are familiar with the question of 
labor ? 

Mr. Butler. I am. 

The Chairman. State during the last eight or ten years what has been 
the condition of labor here and elsewhere. 

Mr. Butler. It has been in a depressed condition. 

The CnAiRMAN. When did that depressed condition commence % 

Mr. Butler. It commenced in 1873. 

The Chairman. Aud continued until when % 

Mr. Butler. It continued till the present time. 

The Chairman. How is it now ? 

Mr. Butler. I do not think it is any better now. I think that the 
chances are even worse. 

The Chairman. Why do you say that the chances are worse % Is the 
pay less % 

Mr. Butler. The pay is less. That is one reason. And a greater 
reason still is the ignorance of the people on the question of finance. 
In other words, the people do not understand the question. They have 
been taught to believe that the contraction of the currency was neces 
sary in order to bring about specie payment. They have been told that 
there has been a resumption of specie payment, and the majority of the 
the people believe it. Now I do not think that there has been any re- 
sumption of specie payment, but I do think that there has been a resump- 
tion of confidence, and that that confidence will produce speculation. 
There is not money enough in the country to carry on the business if 
we should have a prosperous tide. Consequently the business men will 
again fall back on the old inflated credit system and there will be an- 
other smash up. 

The Chairman. Then you think that this notion of affairs being in a 
more prosperous condition now than they were two years ago, is only a 
matter of imagination and speculation, and is not reality. 

Mr. Butler. That is my opinion. 

The Chairman. What was the average price of labor in the oil region 
while you were there 1 

Mr. Butler. From 1867 up to 1873 the engineers and firemen and 
those who dressed tools were paid from $100 to $125 a month — I mean 
the drillers who put down the wells. Laborers got $90 a month. I paid 
those rates aud I paid no higher wages than were paid by others. Af- 
terwards the standard monopoly was organized and commenced opera- 
tions in 1872. They had a law passed in the legislature of Pennsylva- 
nia incorporating the Southern Improvement Company. That raised 
quite an indignation in the oil country. The law, I believe, was repealed 
and then the Standard Oil Compauy was formed — a joint stock opera- 
tion — with a capital of $7,000,000. Considering that the great oil field 
only comprised a couple of small counties, the company made their cal- 
culations (which have proved quite successful) that a capital of $7,000,000 
would control the entire business of the oil region and allow of its being 
monopolized. Previous to the forming of this Standard Oil Company, 
we had individual pipe line companies there. In Tideout, for instance, 



DEPRESSION IN LABOR AND BUSINESS. 415 

where I was, there was an oil pipe line. The New York and Alleghany 
Company had a pipe line, and the New York and Titusville Company 
Lad a pipe line. These pipe lines were lines of seven inch iron pipe that 
were laid to the oil tanks — large receiving tanks that would hold 20,000 
barrels. The average tanks at the wells would hold about 250 barrels. 
The oil was pumped into these wells, and when they were nearly full it 
had to be pumped out, and these pipe lines were paid 20 cents a barrel 
for doing it. But when the Standard Oil Company got to work, it 
squeezed out all these small pipe lines. It bought out all that it could 
buy and those that it could not buy it squeezed out. 

The Chairman. What do you mean by that % 

Mr. Butler. It ruined them by competition. The same thing was 
done wi:h the refiners. All the refining industries of Pittsburgh down 
along Oil Creek and Tideout, and all through that section of country 
(quite a number of them), came under the control of the Standard Oil 
Company. Then the new constitution of Pennsylvania in 1874, prohib- 
ited anybody who was directly engaged in transportation to be engaged 
in production, and as the Standard Oil Company was engaged in both 
production and shipping it formed another company, called the United 
Pipe Line. This United Pipe Line was supposed to be an independent 
line which the Standard Oil Company had nothing to do with, but as a 
matter of fact the United Pipe Line is a part and parcel of the Standard 
mouopoly. They are all one company and under one head. By buying 
up the pipe lines and by buying up the refineries, the Standard Oil 
Company got control of the entire production of the oil country, because 
if I were a producer of oil, after I had pumped and filled my tanks, I 
had to dispose of my oil or to close up my well. If I went to the Stand- 
ard Oil Company and asked them to take my oil, they would say " Our 
tanks are full, we cannot take your oil." So that I was obliged to do 
one of two things — I am speaking now of the individual producers of 
the entire region — I was obliged either to shut down my wells or to 
pump my oil on the ground. At the time the Standard Oil Company 
was started, they had a little competition with shippers and producers 
in Tideout, but they soon got these men in with them, and those whom 
they could not get to consent to go in with them they entered into com- 
petition with and drove them out of the market altogether. They did 
that in this way : They got control of the oil. Every producer had to 
pump his- oil into their tanks. Then they entered into a league with 
the Pennsylvania Railroad Company, the New York Central, the Balti- 
more and Ohio, and the New York and Erie. They were to divide all 
their transportation between these companies, so many thousand bar- 
rels to each company, and the companies were either not to buy at all 
from other shippers or to buy in such a way that they would cramp these 
other shippers. The effect of that was simply this : The oil men did 
not understand at the time the full power of these standard oil combi- 
nations, and thought that other influences were at work depressing the 
market, and in order to tide over the time of low prices they held their 
oil instead of selling it. This oil was costing them $3 a barrel to pro- 
duce it. They kept their tanks full of oil, and then they pumped their 
oil into the tanks of the Standard Oil Company and held their oil there, 
paying insurance on it, thiukiug that there would be a rise in the mar- 
ket. But the market steadily decreased, and oil was sold as low as 40 
cents a barrel, which had cost $3 a barrel to produce. The individual 
producers were thus obliged to go to baukers to borrow money, giving 
their wells and real estate as collateral security, in order to get sufii- 



416 DEPRESSION IN LABOR AND BUSINESS. 

cient money to pay their workmen, to defray their daily expenses, and 
to enable them to hold the oil for a rise. 

The Chairman. What was the effect of this combination on the indi- 
vidual owners and operators and laborers in that region ? 

Mr. Butler. It sent the individual producers into bankruptcy and 
insolvency, and they are bankrupt today. I do not know one of them 
who is not bankrupt to-day. It had the effect of reducing the wages of 
laboring men from $90 a month to $30 a month. It had the effect of 
compelling the individual producers to economize both in the putting 
down of their wells and in pumping them. Previously to the establish- 
ment of this Standard Oil Company, it was necessary in the oil country 
to have a separate boiler and engine for every well that was sunk, so 
that it required two men at $90 each per month to run every well. 
From the advent of the Standard Oil Company, the individual produc- 
ers were obliged to discard their small boilers and engines, and to pur- 
chase larger boilers and engines with sufficient power to run five or six 
or seven wells. These seven wells would thus be run by two men, where 
previously they had been run by fourteen men ; and these two men re- 
ceived only $60 a month ($30 each), while the fourteen men had previ- 
ously received fourteen times $90 a month. 

The Chairman. Does that state of things exist there now ? Is the 
oil produced by this Standard Oil Company $ 

Mr. Butler. The oil is not produced by the Standard Oil Company, 
but the Standard Oil Company controls the production. It has the 
control and management of the whole operation. 

The Chairman. In what counties ? 

Mr. Butler. McKean County, Warren, Venango, Crawford, Butler, 
Armstrong, and Clarion. These are the principal counties. 

The Chairman. I understand you to say that in all these populous 
counties of Pennsylvania, the whole production, transportation, and sale 
of oil is in the hands and control of this Standard Oil Company? 

Mr. Butler. Yes, sir. 

The Chairman. And that individual enterprise, or the enterprise of 
individuals associated together, has no power to compete successfully 
with this combination ? 

Mr. Butler. They cannot do it; it is impossible. 

The Chairman. Is there a permanent improvement in the price of 
wages of labor in the city of Boston and its vicinity ? 

Mr. Butler. No, sir; there is not a permanent improvement. 

The Chairman. State why. 

Mr. Butler. There is no basis for it= In order to have any improve- 
ment in the wages of labor, manufacturing industries must revive, and 
they must revive on a solid basis. There must be a cash capital for 
them. They must have something besides credit. That cash capital 
does not exist in this city nor in this State. The banks of Massachu- 
setts are as much of a monopoly as the Standard Oil Company is in the 
oil country. In other words, there is no money to pay labor, only what 
a man can get by going to the bank. He cannot obtain money from the 
bank without good collateral security, and the collateral security of 
Massachusetts, like the collateral security of other States in the South 
and West, has been pledged before. 

The Chairman. Are the woolen and cotton and other manufactures 
in and about Boston in a prosperous condition now ? 

Mr. Butler. As far as I can understand there has been an impetus 
given to the manufacturing industries of cotton and woolen, but it has 
not yet affected the price of labor. 



DEPRESSION IS LABOR AND BUSINESS. 417 

The Chairman. Has it had the effect of giviag additional employ- 
ment? 

Mr. Butler. I have not heard that it has. 

The CHAIRMAN. Do you believe that this present symptom of prosper- 
ity is likely to be permanent? 

Mr. Butler. No, sir. 

The Chairman. Why ? 

Mr. Butler. I believe that no business can be carried on successfully 
on a cash basis solely. The people, as I stated before, have been led to 
believe that we have resumed specie payment. Tbe prosperity is imag- 
inary. We have not resumed specie payment. The coin is not in the 
country. If we should have a further depression of trade such as we 
have had from 1873 up to the present time, that in itself would set the 
people a thinking. Then, on the other hand, if we should have pros- 
perity (whether that prosperity be caused by undue speculation or not), 
it will cause a financial revulsion, because money, which is the tool of 
trade, is not to be obtained. The bankers have not money of their own, 
and if they lend money at all they will be obliged to lend the deposits 
of their creditors. Then, if the borrowers should fail in their specula- 
tions, the brinks would suffer first and their depositors next; so that I 
see nothing for this country but another financial revulsion in a very few 
years, such as we had in 1873. The extent of it will be measured by the 
extent of private credit. 

The Chairman. We have not yet got fairly over the disaster beguu in 
1873, have we 1 

Mr. Butler. We have not got over it, but we are now on the eve of 
a Presidential election. We have just gone through several State elec- 
tions prior to working up a little excitement for the Presidential election. 
There is a class of men in this country who in fact have no homes, who 
are simply traders and brokers, and who care nothing for the interests 
of the people or of the country. They are the men who want to control 
it in their own interest. I do not think for one moment that those men 
would hesitate or scruple in raising false hopes in the minds of the peo- 
ple for the purpose of carrying the next Presidential election. 

The Chairman. Do you think we have legal-tender currency enough 
in circulation to meet the necessary wants of trade ? 

Mr. Butler. I do not. I think we have too many national-bank notes 
and not enough legal-tender notes. 

The Chairman. Do you believe the legal-tender currency a better 
currency than the national-bank currency ? 

Mr. Butler. I do. 

The Chairman. What is your opinion as to the policy of withdrawing 
the national-bank circulation and having a common currency issued by 
the government ? 

Mr. Butler. I would be in favor of calling in the bonds from time to 
time, as Secretary Sherman called in the 6 per cent, bonds, but I would 
not pay for them iu other bonds. I would pay for them in government 
money and would abolish the national banks as banks of issue. If they 
wish to continue in the banking business, let them do so on their own 
money, not on the credit of the government. I think that our present 
national bank system is dangerous to a republic — dangerous to free in- 
stitutions. I think from what information I can gather, that the bank- 
ers have it in their power to-day to take every dollar of specie out of 
the Treasury if they see tit, aud the reason they do not do so is that they 
think they might themselves be the losers iff doing so. 

Coming back to the oil question, I desire to state that, by reason of 
H. Mis. 5 27 



418 



DEPRESSION IN LABOR AND BUSINESS. 



the low price of oil brought about by this Standard Oil Company, this 
country has lost over $200,000,000 in the price of its oil exports since 
the establishment of the Standard Oil Company iu 1873. For the five 
years ending January 1, 1877, we exported 1,105,463,24:2 gallons, at an 
average price of 15 cents per gallon ; equal to $165,819,463. Previous to 
that we received for 558,413.580 gallons of oil, $184,276,431 ; whereas for 
1,105,463.242 gallons we received only $165,819,468 ; in other words, a 
falling off of $18,457,013 as compared with former years when we 
shipped but half the quantity. 

t^ Views of Mr. John M. Devine. 




Mr. John M. Divine came before the committee at its invitation. 
He stated in reply to preliminary questions: I am a resident of Charles- 
town ; I have resided here four years ; I am a photographer. 

The Chairman. State what in your judgment has brought disaster 
to the industrial affairs of the nation, and especially to the labor of the 
country, during the last ten years. 

Mr. Devine. The question of the employment of labor appears to me 
to be entirely a question of whether capital can be invested at a profit. 
During the past ten years we have had falling prices. As Mr. Sherman 
says, the value of money in this country has been doubled in its pur- 
chasing power. When the value of money is increasing prices are fall- 
ing, and when prices are falling, capital cannot be invested securely, 
because there is always a liability that the money invested iu any pro- 
ductive enterprise will not be returned. Falling prices necessitate a 
reduction of cost, and the way to reduce cost is to cut down wages, be- 
cause wages is the principal item of ccst in the production of raw ma- 
terials and manufactures. The depression in business has been pro- 
duced, in my judgment, by the contraction of the currency, taken in con- 
nection with the increasing population, and with the addition of the 
reconstructed States to the Union at the close of the war, which States 
were entirely devoid of legal money. So that the money which was in 
circulation in the loyal States had got to cover a field much larger than 
it was originally intended for. It had to be spread out thinner, so to 
speak. Prices would have fallen from that cause alone. But in addi- 
tion to that, the contraction of the currency in order to resume specie 
payment has intensified the matter and caused this severe depression 
in prices. 

The Chaieman. That, in your judgment, has prevented capital be- 
ing invested iu manufacturing and other enterprises? 

Mr., Devine. Yes, sir. People will invest in the article that is in- 
creasing in value and will avoid the one that is decreasing in value. 
Property and productive enterprises have been steadily going down, 
while the value of money has been increasing, so that the man who held 
his money and allowed prices to fall found himself at the end of ten 
years able to purchase twice as much property. So his wealth has 
been doubled by his simply holding on to the money which he had on 
hand. If he had invested in property or in industrial pursuits, he would 
not have been able to get back his money, to say nothing of getting any 
profit on it. In my opinion, the depression in business has been caused 
by men investing their money and trying to transact business while 
prices were falling. 

The Chairman. And labor was in sympathy with business and had 
to share its dangers and troubles ? 

Mr. Devine. Labor finds its employment when capital can make a 



DEPRESSION IN LABOR AND BUSINESS. 419 

profit. When capital cannot make a profit, and is withdrawn from 
business, then labor must go idle. 

The Chairman. Are you well acquainted with the value of real 
estate in Boston f 

Mr. Devine. I know of one piece of property near me which was 
sold eight years ago for $40,000. It was mortgaged for $18,000, and 
last year it was sold for the mortgage ($18,000). 

The Chairman. Is that a general test as to the shrinkage in real 
estate in Charlestown and this city J ? 

Mr. Devine. Yes, sir; I am informed by real estate agents that that 
has been their common experience. Of course there are a great many 
estates that have not been mortgaged and have not therefore been sold. 

The Chairman. Is there an upward tendency in real estate at present? 

Mr. Devine. Eeal estate is a little firmer now. The forced sales are 
nearly over. The shrinkage has been so great that the mortgagees, 
when the mortgages became due, have not extended the time oil them 
where they found the real estate good for the amount of the mortgage, 
and the foreclosures have taken away all of the property that was forced 
on the market. The reason why real estate is a little firmer is because 
there is not so much of it for sale. 

The Chairman. What in your judgment is about the average per- 
centage in the shrinkage of real estate from 1873 to the present time ? 

Mr. Devine. The information of which I am in possession would lead 
me to estimate it as about between 45 and 50 per cent. 

The Chairman. And you think that the tendency as regaids the 
value of real estate is upwards? 

Mr. Devine. I think that real estate which is at present occupied and 
rented is not going any lower. 

The Chairman." Neither in rent nor in sales? 

Mr. Devine. Neither in rent nor in sales, except where leases are expir- 
ing and where rent has been too high heretofore. There would be re- 
ductions in such cases as that. 

The Chairman. What has been the effect with regard to other indus- 
tries ? 

Mr. Devlne. The manufacturers have been forced to cut down wages 
to the very lowest point on which their men could possibly live (and 
really below living rates), and yet they have not made any profit, and 
many of them have gone into bankruptcy. 

The Chairman. What kind of manufactures are carried on in Charles- 
town f 

Mr. Devine. We are not manufacturing extensively there. Charles- 
town is really an appendage to Boston. We have several furniture 
manufactories there. We had a drainpipe manufactory, but that has 
gone nearly out of existence. 

The Chairman. How have the men engaged in wholesale and retail 
business — merchandizing and traffic generally — been affected ; have 
many of them gone under ? 

Mr. Devine. Yes, there have been some failures. But the most of 
our men in business have found it necessary to reduce their stocks, to 
put in a cheaper grade of goods, and to deal in small articles, such as 
the people are able to purchase. Our stores have a cheaper line of 
goods altogether than they had formerly. 

The Chairman. Is there a marked prosperity there no.w among youx 
dealers in merchandise ? 

Mr. Devine. There is no improvement to speak of. The business 



120 DEPRESSION IN LABOS AND BUSINESS, 

seen feel a little more hopeful ; but- the improvement is not anything 
wry decided in its character. 

The Chairman. How is it in regard to the employment of laboring 
men ; do they all find employment'? 

Mr. Devine. Ko, sir ; some men 'that I know of hare not been able 
as } tt to find employment. 

The Chairman. Are they in & state of destitution % 
.Mr. Define. Yes, a great many of the laboring men with families are 
exceedingly destitute in Charlestown. 

The Chairman. How are the wages of labor there compared with 
tkt they have been duriug the past ten years ; are they improving or 
standing stilH : & - - 

Mr. Devine. The wages of mechanics are a little higher,r:3Dhe wages 
ifeommon laborers are about the same as during the last year. 

The Chairman. Is skilled laboriu better demand than common labor % 

Mr. Devine. Yes. 

The Chairman. What are the wages of ordinary labor— of men who 
work by the. day on the streets, &c iw, 

Mr. Devine. A dollar a day. : 

The Chairman. An 1 the men find themselves 1 

Mr. Devine. Yes. ; : ; 

The Chairman. What were their wages previous to 1873 ! 

Mr. Devine. Previous to 1873 I was not a resident of Charlestown. 

The Chairman. Are the wages lower now than they have been since 
$ ou have been a resident there ? . 

Mr. Devine. I am not able to state that any persons have been em- 
ployed for less, although there have been many out of employment who 
would willingly have taken anything they could get during tho last 
ilsree or four years. Still I am not able to state that any have been 
employed for less. 

The Chairman. Is money abundant there ? 

Mr. Devine. No, sir. There are many wealthy men there ; but in my 
Business (and that is the experience of most men) we find more demands 
for credit than formerly. 

The Chairman. I understand you to say that the prices are really 
about what they have been for several years past. 

Mr. Devine. The prices have been growing lower every year, and 
lave not yet advanced anything to speak of. They are about at the 
l&srest point at the present time. 

The Chairman. What is the population of Charlestown? 

Mr. Devine. About 30,000. 

The Chairman. What is your opinion iu regard to the propriety of 
itn eight-hour law J ? 

Mr. Devine. I believe that a reduction in the hours of labor to eight 
lours, or even less, is the only practical means at the present time (outside 
af such a condition of finance as would furnish employment) to give the 
working man opportunities for improvement, and for cultivating himself 
for the discharge of his duties as a citizen. I think that through a re- 
duction of the hours of labor the condition of the working man can be 
crer.y much improved, and I think that it should be done, as far as it is 
possible to do it, by law. 

The*CHAiRMAN. A reduction of the hours of labor would give employ- 
ment to more men, would it not? 

Mr. Devine. Y r es. 

The Chairman. What effect would it have on the employment of 
iromen and children ? 



DEPRESSION IN LABOR AND BUSINESS. 4-? 1 

Mr. Devine. I think that if there was a greater demand for the em- 
ployment of adults, and if the heads of families were generally employee 
they would not cousent to the employment of their children at so earlj 
an age in factories and shops. 

The Chairman. Is the employment of women and children carried 
on to any great extent in Oharlestown ? 

Mr. Devine. A large proportion of the women and children who are 
employed find their employment in Boston. The children of the great 
masses of the people goto work here at a very early age— most of tjieni 
when they leave the grammar school. They never enter the high 
school. 

The Chairman. How far have they progressed in the grammar school 
before they go to business ? 

Mr. Devine. I cannot give very accurate information on that point. .■ 

The Chairman. They only know the mere rudiments, I suppose— 
reading, writing, and arithmetic ? 

Mr. Devine. Yes, sir. 

The Chairman. Is there anything else in regard to the labor ques- 
tion which you desire to state? 

Mr. Devine. I am of the opinion that we will have a temporary im- 
provement in wages and business, but only temporary. I think that 
within a very few years w T e will have labor as much depressed or per- 
haps even more depressed than we have yet seen it. The great masses 
of the laboring people have lost their homes and have spent all their 
savings dnring the past few years. They are now obliged to hire houses! 
instead of living in houses of their own. The cause of our present im- 
provement I believe to be the repeal of that portion of the resumption 
act which permitted a further contraction of the currency — also the fail- 
ures of the crops in Europe, which compels the nations of Europe to 
send their gold here for our products. As the gold comes to this coun- 
try from other countries, the outflow of it from other countries reduces 
the volume of 'their currency and causes bankruptcy aud a depression 
of labor there. This is sure to bring labor in those countries to so low 
a level that we will have foreign goods come into our markets and un- 
derselling us, because they can be produced at such low rates. This I 
think will cause a reflux of the gold which has come into this country, 
and will again depress prices. The experience of our business men has 
been such during the past ten years that I think it is reasonable to ex- 
pect that as soon as prices begin to fall they will be more timid even 
than they have been, that capital will be hoarded, and that we wil! 
again have a severe depression. 

The Chairman. You think that we have not currency enough in cir- 
culation to meet the necessities of i he country ? 

Mr. Devine. I do uot think that it is a matter of great importance 
what the volume of the currency be after values have become adj listed, 
but I think that the currency should never be made less, so as to cause 
prices to fall. The volume should be maintained so as to main tain; 
prices steady, oi' be increased so as to give prices an upward tend- 
ency aud to stimulate business. I do not consider it important as to 
what the volume of currency be, provided there is enough to go around 
after debts are paid and values adjusted, but it is the changing of the 
value of money after men have been stocking their stores and manu- 
facturing their goods, anticipating a future market, that causes bank- 
ruptcy. Any decrease in the volume of money which will cause a fall 
in prices when men are manufacturing goods and stocking their stores, 
anticipating the market, can only result in bankruptcy. 



422 DEPRESSION IN LABOR AND BUSINESS. 

The Chairman. Have tbe bankruptcies been numerous in* Charles- 
town ? 

Mr. Devine. Yes ; they have been quite numerous. 

The Chairman. You spoke of laboring men who from want of em- 
ployment have been obliged to part with their houses and homes in 
order to bridge over the hard times. State whether that has been gen- 
eral or whether it has been only confined to a few cases. 

Mr. Devine. There have been a great number of such cases. 

The Chairman. Arising from the necessity of raising means to live? 

Mr. Devine. Yes. There is another thing which bears on the labor 
question which I would like to mention. I should think that it would 
be a good plan for Congress to consider the practicability of buying all 
patents that are of any value from the patentees and making them the 
common property of all manufacturers and users, so that only one fortune 
should be made out of a patent, and that by the inventor, instead of 
several fortunes being made* out of it by different speculators. The 
fortunes that are made out of patents come from the consumers, from 
the great masses of the people. 

The Chairman. You would not prohibit an inventor from getting a 
patent ? 

Mr. Devine. No. sir; I would protect him in that right and would 
have him paid its just value, and then let it go to the use of the whole 
community. Some of our patents are huge monopolies that are extended 
again and again, and millions are made out of them, not by the invent- 
ors, but by the speculators and monopolists who get control of them. 



Boston, November 6, 1879. 
Views of Mr. Charles H. Litchman. 

Mr. Charles H. Litchman came before the committee at its invita- 
tion. He stated, in reply to preliminary questions, that he is a resi- 
dent of Marblehead, and has resided there ever since he was born — 
thirty years ago. 

The Chairman. What is your occupation ? 

Mr. Litchman. I commenced selling for my father, who was a shoe 
manufacturer. I sold shoes for the firm of which he was a member 
for six years. Then, in 1870, in company with my brother, I commenced 
the manufacture of children's shoes (that being our specialty), in which 
I was engaged for four years longer. 

The Chairman. Are you engaged in that business now? 

Mr. Litchman. No ; I left shoe manufacturing to study law. Then I 
went to work. I have worked at the bench since I left off manufactur- 
ing, and by reason of working at the bench 1 have been brought iu con- 
nection with the labor movement, so called, throughout the country ; 
that is, east of the Mississippi Kiver. 

The Chairman. Are you now connected with a trades union ? 

Mr. Litchman. Not exactly in the sense of trades unions. I was 
grand servitor of the Knights of St. Crispin irom the organization of 
the Grand Lodge of Massachusetts until that grand lodge merged in the 
International Grand Lodge, which includes subordinate lodges of the 
United States and Canada. The order of the Knights of St. Crispin is 
the trade organization of the boot and shoe makers of America. It was 



DEPRESSION IN LABOR AND BUSINESS. 423 

at one time the strongest trades union that has ever existed in America, 
numbering very nearly 100,000 members. But the movement in which 
I am at present engaged partakes more of the labor movement, so called, 
combining into the union all branches of operatives. 

The Chairman. From the knowledge which you have acquired, ow- 
ing to the position that you hold, give us an idea of what your views 
are in regard to what is most beneficial for the laboring classes of the 
country. 

Mr. Litchman. The invitation to be present before this committee 
came upon me so suddenly, that my remarks must of necessity be of a 
rambling and disconnected nature, and I will be compelled, for that 
reason, to ask your indulgence if I should chance to be less concise than 
you desire. I believe that the history of labor reform (I use that phrase 
in a sort of generic sense, as embodying what we all are seeking to 
gain — the alleviation of the evils which surround men engaged in earn- 
ing an honest living) is really the history of the world. I believe that 
the world moves as well in moral and social events as in political and 
historical events, or as it does in the sense in which Galileo used it — in 
the sense that the planet revolves. I believe that the basic principle 
of labor reform is education. If all men were educated, I believe that no 
men would be extremely rich and no men extremely poor, as is the case at 
present. The problem is how to attain that education. I state that in 
a broad and general sense; that if all men could be educated, the prob- 
lem of labor reform could be more easily solved. All men are not edu- 
cated, and consequently we take the question of labor reform in detail, 
and have to meet the evils that exist, although every particular evil 
must be a branch of the whole general subject. For instance, as to the 
question of finance and of the currency, my study and investigation 
have taught me that the present system of finance is wrong. I do not 
claim to be one of those extremists on the financial question, but I do 
claim to be sufficiently radical in my views to call myself a greenbacker. 
I believe that the power to coin and issue money is a sovereign power 
belonging only to the government. I will waive the discussion of the 
question as to what the money should be coined of, because that enters 
too much into abstract theories rather than into practical facts, but 
whatever the money is coined of, the government alone should, in my 
judgment, coin it. For that reason, I believe that the system of national 
banks is wrong, so far as private corporations are made banks of issue. 
Under our present system, I see no substitute (at least I am able to 
suggest no substitute) for our national banks as banks of deposit and 
discount. But there are, in my judgment, three very important 
reasous why the government alone should issue money, and why the 
national-bank currency should be withdrawn, and the money of the 
government (whatever that money may be) subsittuted for it. These 
three reasons are briefly these: First, of course, the national-bank note 
is not a legal tender. That is so self-evident that it needs no argument. 
The national-bank note passes by sufferance and by common consent; 
not by authority of law. That is perhaps a trivial reason in the sense 
that nobody would refuse to take national-bank notes except upon a 
technical legal point. The second reason is, that the perpetuation of the 
national-bauk system means the perpetuation of the nation:!] debt, a 
curse which I do not want to see brought upon the American people. 
And right here I might be allowed to digress, aud to say that while I 
do not propose to lay my pigmy intellect alongside of the giant intellect 
of the McCullochs and Bristows and Shermans, I do say that the fund- 
ing operations of the powers that be, at the head of the government, are 



424 DEPRESSION IN LIBOR AND BUSINESS. 

a curse to the United States. I regard the financial operation of the 
government by which the 6 per cent, bonds were funded into 4 per 
cents as a curse upon the country in this sense, that whatever may be 
the prosperity of the government, not a dollar of these 4 per cent, bonds 
can be paid until they mature. They must be bought in the open market, 
and whatever premium the money power sees fit to put on these bouds 
must be paid for them. It is impossible, in the natural order of things, 
for the government to accumulate sufficient gold or coin (coin being the 
term used in the contract at preseut) to pay the bonds that have been 
funded at 4 per cent. The natural logical result must be to have those 
bonds funded again when they become due, and thus, as I say, to per- 
petuate the national debt. 

Now, coming back, the national banks are based upon government 
bonds. As long as the national-bank system exists, and as long as that 
is the basis of it, of course it means perpetuation of the national debt. 
At the end of thirty years, supposing that all the debt of the country 
(in round numbers, two thousand million dollars) has been funded at 4 
per cent., we will have paid in interest twenty-three hundred million 
dollars, and still have the interest of the debt to pay. I believe that 
that is wrong. I believe that it would be better to let the bonds remain 
out at the larger rate of interest, the government having the right to 
pay them at any time. 

The first and second reasons are, perhaps, not so important as the 
third. The volume of currency regulates the value of all commodities. 
That is a self evident fact in political economy which no one will dis- 
pute. The amount of currency in circulation in the country fixes the 
value of every house, every horse, every loaf of bread (particularly the 
loaf of bread), because labor is the first to fall and the last to rise when 
there is a change of values. The power to regulate the volume of the 
currency under our national-bank system is in the national banks. They 
can produce a fictitious prosperity by an expansion of the currency. 
Every one will admit (and if any one doubts it, the present boom in busi- 
ness, so to. speak, is a proof of it) that an expansion of the volume of 
currency causes a rise in the price of all commodities. 

The Chairman. Do you understand that the national banks, as the 
law now stands, have the power to issue any amount of currency they 
please ? 

Mr. Litchman. I understand that they have the power, by depositing 
bonds at Washington, to issue any amount of money they please within 
85 per cent, of the amount of the bonds. The amount of bank issue is 
only limited by the amount of United States bonds that the banks can 
obtain, which would make practically two thousand millions of national- 
bank currency. The point that I desire to make is, that the banks have 
the power to expand and the power to contract the currency. When 
the Secretary of the ^Treasury contracted the currency forty four mil- 
lions of dollars, so great was the injury to the business affairs of the 
country that Congress stepped in and prohibited any further contraction 
of the currency. That occasioned a destruction of legal tenders. Now, 
if forty- four millions can so far disturb commercial affairs, what would be 
the effect of an unlimited expansion to the amount of a hundred or a 
hundred and fifty or two hundred millions of dollars (which is within the 
power of the 2,000 banking corporations of the country to issue) ? It will 
be argued on the other side that that would be an argument against an 
inflation of the currency, but I thiuk that is an entirely different thing. 
The point is that the power to expand and contract the currency is in the 
national banks, by depositing bonds and getting currency, and by suiv 



DEPRESSION IN LABOR AND BUSINESS. 425 

rendering the currency and taking up the bonds. By expanding and 
contracting the currency at pleasure and thus destroying values, those 
who own the money will eventually own all the property of the coun- 
try. An inflation of the currency by the government is an entirely dif- 
ferent thing. I do not advocate that the government shall buy a certain 
amount of printing presses and set them to work printing greenbacks. 
It seems to me that the more judicious and logical way is, if possible, 
to leave the currency question out of the domain of politics. I do not know 
that that can be done, but if it can be done, if the question can be ap- 
proached on its merits, and not with ridicule and personal abuse towards 
every man who dares to give expression to his thoughts on the currency 
question, it would be a good thing. Can we not take the history of the 
world, and find out, so far as statistics give it, the amount of money per 
capita which any country or which the whole world combined uses in 
commercial affairs, and can we not then fix that amount per capita by 
constitutional amendment as our limit of currency! 

The Chairman. Can you not do that without a constitutional amend- 
ment 1 

Mr. Litchman. The only point in having a constitutional amendment 
for it is that the amount will not be subjected to change by every suc- 
cessive Congress. Congress has the power not only to create but also 
to repeal, but under the Constitution the process of repeal would be 
so slow that the attention of the people could be brought to any injure- 
likely to arise from a change. That is what I say — by constitutional 
enactment fix the amount per capita which the experience of business 
in this and all other countries has shown can with safety be kept afloat 
and can keep business in motion. 

The Chairman. By what process would you ascertain this per capita 
arrangement? 

Mr. Litchman. I am frank to say that my experience is too limited 
to give a specific and decisive answer. I know that there are bankers 7 
almanacs in which statistics are collected to show the amount of business 
done, and to show the amount of currency necessary to do it. It might 
take some years to get these statistics collected. That would bring me 
directly to the discussion of another question which bears right on this 
question ; that is, the establishment by the United States of a national 
labor bureau. 

The Chairman. In order to procure those statistics on which you 
would base the amount of currency to be issued ? 

Mr. Litchman. Exactly. That would be one of the duties of such a 
bureau. It will be admitted, of course, that if the volume of currency 
regulates all values, it certainly regulates the value of the wages paid 
to labor. It" my wages are $1 a day, and if before I receive my week's 
wages on Saturday night a variation in the currency has sent up the 
price of flour $1 a barrel, I really do not get $1 a day for my wages. 
We have a labor bureau here in Massachusetts, which is in some respects 
admirable in regard to the information it has been able to gain, but it 
has not the confidence of the workingmen of the State. I say this in 
all respect to Mr. Carroll D. Wright, the chief of that labor bureau. 
He is aware of my feeling on this matter. There is a feeling among 
the labor reform people (so to speak) that the Massachusetts labor bu- 
reau is, to a certain extent, a political machine which can furnish an 
argument on any question affecting capital and labor (using the common 
phrase) at short notice, which argument is always in the interest of cap- 
ital. I am not saying that that is my opinion. I am merely giving you 
the fact, and that is a fact which every man who has dealt with labor 



426 DEPRESSION IN LABOR AND BUSINESS. 

reform in Massachusetts can corroborate. Now a national labor bureau 
in order to have any value must have the confidence of the working 
people. It must in its constitution be composed of men who have the 
confidence of the people of the United States, and who at the same 
time have principles and ability. It must not be a political machine or 
shelf on which to place political favorites. It must not be a place to 
smother the inquiry of labor on the one hand, and on the other hand it 
must not be a machine to turn out opinions in favor of any pet theory 
or against any pet theory. It must give facts stern and stubborn as 
they are. By such a bureau there would naturally be gathered facts in 
regard to labor and finance which cannot be reached now, because one 
State cannot deal with the question that affects all States. As an illus- 
tration of that, permit me to refer to the question of convict labor. 
While I was manufacturing shoes, and while I was on the road selling 
them, I was brought in contact with this question. At the store of a 
jobber in a neighboring State I was shown a shoe actually better than I 
could produce, which was offered to me at 15 per cent, less than I could 
produce a like class of goods for, and on inquiry I was told that the 
reason why it was so cheap was that it was made by convict labor — by 
labor in a penitentiary. 

The Chairman. In what State was that? 

Mr. Litchman. The place where I was trying to sell the shoes was in 
Connecticut, but this couvict shoe that was shown to me was made in 
New York. That led me to study the question of convict labor. That 
was while I was manufacturing shoes. After I left off manufacturing 
shoes and became a workman at the bench, I was naturally drawn to 
the study of the labor question. The poverty under which labor has 
suffered during the last six years has made every man who works at the 
bench ask himself the question why, in a land of plenty like ours, a 
land bfest by Providence with such boundless resources, mineral and 
agricultural, it is so; or why it is that men who are eager and willing to 
work cannot find any work to do ? I know of men, gifted by the Al- 
mighty with everything in the way of mental ability and physical power, 
who cannot get work to do. In the investigation of the labor question 
I naturally pursued this subject of convict labor and made it a subject 
of special study. I am not prepared to say just exactly what the remedy 
is, for two reasons : First, on account of the difficulty of adopting any 
remedy ; and, second, because I am a member of a special committee ap- 
pointed by the legislature of Massachusetts to investigate this very sub- 
ject and to report thereon during the coming session of the legislature, 
and it would be hardly proper in me to forestall my judgment as a mem- 
ber of that committee by any expression of opinion before our hearings 
are concluded. It would be like deciding a case and then hearing the 
evidence afterwards. But I have nearly made up my mind to this effect, 
that the whole question of convict labor is one which cannot be dealt 
with by any particular State, but must be dealt with jointly or else by 
national supervision. I use the term " supervision." I was going to say 
legislation, but thought that, perhaps, with national supervision, under 
this national labor bureau which I have spoken of (collecting all the 
facts from all the States and collating them together), some plan could 
be suggested which could be put into operation in every State where con- 
vict labor was employed. 

The Chairman. You do not entertain the opinion that Congress has 
the power to regulate that question so far as it concerns the States-? 

Mr. Litchman. That opens up the discussion of the question of State's 
rights. It seems to me that that would involve the question of how far 



DEPRESSION IlV LABOR AND BUSINESS. All 

the general government could interfere with the regulation of affairs in 
individual States. 

The Chairman. It might come under the clause of the right of Con- 
gress to provide for the general welfare. 

Mr. Litciiman. Possibly. But I understand the difficulty of suggest- 
ing remedies for any of these causes, I abhor centralization of power; 
but at the same time I think that the general government should be 
strong enough to protect every citizen, whether rich or poor, whether 
at home or abroad. 

The Chairman. That is, in any one State? 

Mr. Litchman. In any one State or in auy one nation. Let it be with 
us as it used to be two thousand years ago with Eomau citizens. Let 
the simple phrase "I am an American citizen" be a protection. Now, in 
regard to this matter of convict labor, the question is, what is the remedy 1 
It involves, in my judgment, the whole theory and system of the manage- 
ment of our penal institutions. Iu the first place, I do not believe that 
imprisonment for crime should be wholly penal, as is the casein most of 
the institutions of this couutry (with very few exceptions). I believe that 
the crime class (as very well stated by Mr. Richard Vaux, of Philadel- 
phia) is divided into three classes, the hereditary criminal, the educated 
criminal, and the accidental criminal. With the educated criminal you 
may put the professional thieves and burglars, because they follow their 
calling as a profession. The professional criminal commits crime and 
takes the chances, just as the man who goes into business takes his 
chauces of success or failure. The accidental criminal is exemplified iu 
many an instance that has occurred during the last five years. While 
engaged in the business of the committee of which I am at present a 
member, we visited several of the criminal institutions in Massachusetts, 
New York, and Pennsylvania, and when visiting a penitentiary we were, 
by the courtesy of the prison officials, allowed to converse with one of 
the inmates. He gave the history of the cause of his incarceration. He 
stated that the crime for which he was sentenced was the first that be 
ever committed. The circumstances were these: He could not get any 
employment, and his family was actually starving for want of food. He 
went down the street and committed a theft, and was for that first 
offense sentenced to four years' imprisoumeur, and became the consort 
of professional and hereditary criminals. Crime is in a certain sense a 
disease, and is hereditary. For instance, when the father and mother 
are both criminals, and when they are both, perhaps, under the influ- 
ence of drink at the time the child is conceived, the chances are 99 out 
100 that the child will be a criminal. Crime may be inherited. That is 
why I have so much sympathy for drunkards. I believe that drunken- 
ness is inherited too. Then comes in again the question of education. 
Education is the basic principle of reform. If we take children and 
educate them, we leave them better than we found them. If they have 
a progeny, their progeny will start a little higher up than the parents 
did, and so in time we may eradicate the hereditary tendency to crime. 
But the accidental criminal appeals to every fiber of sympathy in a 
rnau 7 s body, and some system ot prison management should be insti- 
tuted by which the accidental criminal should be prevented from be- 
coming a permanent member of the crime class. 

The Chairman. That takes in the tramp. 

Mr. Litchman. That takes in the tramp. The tramp is an accidental 
criminal, the vast majority of tramps only becoming so when they can- 
not find work to do. In my judgment the employment of convicts iu 
penal institutions to the detriment of honest labor outside is wrong. 



428 DEPRESSION IN LIBOR AND BUSINESS. 

The Chairman. Does that system exist in Massachusetts ? 

Mr. Litchman. That system exists in Massachusetts — a contract sys- 
tem. There are three systems iu the employment of convict labor. 
There is the contract system, the public account system, and down in 
Georgia they have what they call the lessee system, where the convicts 
are let out on lease. Labor should not be degraded. Every penal sen- 
tence has attached to it the clause of hard labor. I believe that that 
is an insult to labor. I believe that it is degrading to labor. I 
believe that labor is noble and honorable, and, while men must labor 
I believe that the attaching of the penalty of hard labor to a sentence 
for crime is really a degradation to labor. Do not understand me 
as advocating idleness on the part of convicts. To punish a man for 
crime by confining him in a prison and keeping him idle would be, in 
my judgment, the height of barbarity. Now the question is how to 
employ the convict so that his labor will be an element of reformation; 
so to employ him that his labor will not be the cause of making 
more criminals. Consequently the labor that is done in the prison 
should not be brought into unjust competition with labor outside, and 
the problem is how to manage that. It seems to me that there are 
public works on which convicts could be engaged, which works would 
not be otherwise undertaken. For instance, we have here, in Boston 
Harbor, several islands that are being gradually washed away by the 
sea, and convict labor might be employed in preventing that. I merely 
use this as an illustration of how convicts might be employed so that 
their labor should not be brought into competition unjustly with out- 
side labor. You cannot take away from a man that which he never has 
had, and therefore it cannot be suggested as an argument against the 
plan which I propose that the convicts employed in that labor would 
be competing with honest labor because this work would not be done 
unless done in that way. And yet if it were done in that way it would 
not only preserve the channel of Boston Harbor from the impediments 
which the constant washing from these islands by .the action of the 
wind and waves places in the channel, but it would be a useful employ- 
ment for convict labor. 

The ChairmaNo Under your theory, you do not believe that convict 
labor should be made a source of profit, but should be merely a means 
of reformation ? 

Mr. Litchman. I do not believe that the convict should be put up and 
sold, which is the case under the contract system. Under the contract 
system the contractor merely regards the convict as a part of a machine 
out of which he coins dollars aud cents. The contractor's only thought 
is how to get the most labor out of the convict. This element of convict 
labor is peculiarly exasperating to honest labor when there are dull 
times. When times are good then comes the advantage to the con- 
tractor, aud the contract becomes a means by which he interferes with 
honest and legitimate enterprise. I believe that the present system of 
business is wrong. I believe that the wages-labor system is wrong. [ 
believe that the time will come, in the natural order of events, when co- 
operation shall succeed wage-labor, just as wage labor succeeded vassal- 
age. That is my judgment. That brings us to the question of 
machinery. Under our present system capital gets the whole ad- 
vantage of the introduction of labor saving machinery. Labor delves 
from morning till night at so much per day, and gets no advantage 
except in the indirect way in which all mankind is benefited by the in- 
troduction of labor-saving machinery. Under a system of co-operation 
a man would receive that proportion of the profits which his labor bore 



DEPRESSION IN LIBOR AND BUSINESS. 429 

to the cost* of production. It may be argued that that is looking forward 
to a millennium which will never come. I am talking on the justice of 
the proposiliou, not on its possibility. I believe that it can come and 
that it will come. I believe that in isolated cases in the great co opera- 
tive movement in England, labor does receive that proportion of the 
profit of production that it bears to the cost of production. When that 
co operative system comes it will not make any odds how much ma- 
chinery there is in existence, because the more there is in existence the 
better it will be for labor. The first effect of the introduction of labor- 
saving machinery is the degradation of labor. 

The Chairman. How ? 

Mr. Litchman. By the subdivision of labor a man now is no longer a 
tradesman. He is a part of a tradesman. In my own trade of shoe- 
making, twenty years ago the work was done almost entirely by hand, 
and the man had to learn how to make a shoe. Now, with the use of 
machines of almost superhuman ingenuity, a man is no longer a shoe- 
maker, but only the sixty fourth part of a shoemaker, because there are 
sixty-four subdivisions in making shoes; and a man may work forty 
years at our trade, and at the end of forty years he will kuow no more 
about making a whole shoe than when he commenced business. 

The Chairman. He would only know how to make a peg or a waxed- 
end ? ' : 

Mr. Litchman. Yes ; or he would be a laster, or a beveler, or heeler, 
or nailer, or he would be running and using a machine, or a peg-meas- 
nre, or attending to any one of the 64 subdivisions into which the 
trade is parceled out. It takes 64 men now to make a shoe by ma- 
chinery. There you see is an element that comes into the labor question 
which is very important,, and which is at the same time more difficult to 
handle. You cannot turn back the hands upon the dial of human 
progress and say that all machinery must be banished. You would not 
take up the rails, destroy the locomotive, aud break up the railroad cars, 
and go back; to the stage-coaches and horses. You would not tear down 
the telegraph poles^ break up telegraph instruments, and destroy the cables 
that run under the Ocean. Yet all these improvements, while in the 
abstract they benefit mankind, have had as their first result the degra- 
dation of labor by the subdivision of labor. Under our present wage- 
labor system, capital gets the whole advantage of the introduction of 
human brain into human labor. 

The Chairman. The consumer gets some of the advantages. 

Mr. Litohman. The consumer gets some indirectly. That is where 
the abstract benefit comes in. I admit all that. I admit that the shoe 
which formerly cost $7 can now be bought at $3, but one shoe of former 
times would outwear two pairs of shoes now ; so that it is pretty nearly 
the same. If my memory serves me right, there are about 48,000 shoe- 
makers iu Massachusetts. That 48,000, under our present system of 
machinery, produces three times as many shoes as the same number pro- 
duced, twenty years ago. 

The Chairman. How. many of that 48,000 shoemakers can make a 
shoe? 

Mr. Litohman. I have no means of knowing, but I would venture to 
assert that not one-tenth of them can make a shoe, and the shoe that 
they could make would be the old kind of a turned shoe. I cannot make 
a machine shoe. My sixty-fourth part of making shoes is standing at 
the bench and cutting the uppers. 

The Chairman. Still you might hang out a sign, u Boots and shoes 



430 DEPRESSION IN LABOR AND BUSINESS. 

made;" bat the man who only makes pegs cannot say to the world, 
u Here is a shoemaking shop." 

Mr. Litchman. No, sir. Of course, the man who makes pegs would 
not be called a shoemaker anyhow. • But here is another illustration : 
A man goes to the bench and lasts shoes. The lasting of the shoe con- 
sists (after the stock has been fitted) in taking the uppers and drawing 
them upon an insole which has been fastened to the last, and then he 
builds on the upper and tacks it down with lasting tacks, fastens it 
with nails at the toe and heel, and fastens the iusole ready to go and be 
soled. That lasting a man may work at all his lifetime and know nothing 
about soling the shoe, and nothing about heeling it, but he would claim 
to be a shoemaker. 

The Chairman. I suppose that he might acquire that art in one or 
two weeks % 

Mr. Litchman. Yes, he might acquire it in two weeks. 

The Chairman. He would not have to go through a regular ap- 
prenticeship for it? 

Mr. Litchman. No. In stock-fitting, all that a man has to do is to put 
a die upon a piece of leather and take a mallet and hammer it, and he 
is a shoemaker. Anybody can do that. That work is done principally 
by boys. 

The Chairman. Does this rule which you have applied to the manu- 
facturing of shoes apply to all other branches of manufacturing in- 
dustry ! 

Mr. Litchman, It does substantially. I have no hesitation in saying 
that. It applies to every trade, not even excepting stone cutting. In. 
stone-cutting they have got little knives which puts the face on the stone. 
That is a branch of the introduction of machinery to stone-cutting. It 
is what they call the patent hammer. That work used to be all done in 
a different way. There is hardly a trade I can mention that the intro- 
duction of machinery has not affected more or less. 

I am now going to speak of one thing in regard to the effect of labor- 
saving machinery to show you how great the problem is which we have 
under consideration. It does not take a manufacturer very long to un- 
derstand that a certain piece of machinery can be run just as well by a 
child as by a man. Then boys and girls are employed at it and the hus- 
band and father is set adrift to join the grand army of tramps who move 
up and down the land. The child is employed at this work because he 
can be employed at a child's wages. Every child thus employed takes 
the place of a man, and a man is removed from work in order to make 
room for the child. Thus we not only destroy the labor of the present 
generation, but in the natural order of things, when these boys and 
girls become the fathers and mothers of a new generation, we have made 
a draft upou the future which will be honored with compound interest. 
If you go into the mills of this State (and God knows I would say noth- 
ing against my own native State, for I have all the pride of State that 
any man has) you will find children employed that are scarcely four feet 
high, who are just literally coining their young hearts' blood into dol- 
lars and cents. 

The Chairman. Both boys and girls 1 

Mr. Litchman. Both boys and girls. We fortunately have got a law 
now into shape which, if enforced, will correct that evil. In my judg- 
ment, it is the interest of capital to keep labor out of representative 
positions. I believe that labor reform has not so much to fear from the 
opposition of capital (which might be considered perfectly natural in 
the protection of its own selfish interests) as it has from the indifference 



DEPRESSION IN LABOR AND BUSINESS. 431 

and treachery of labor. It may be asked how we are going to remedy 
this matter of the introduction of machinery. I would first enforce all 
labor laws, and through their influence I would compel the attendance 
of children at the public schools. That would of necessity, under the laws 
of this State, give twenty weeks' schooling every year to every boy and 
girl in the State. Then I would encourage by all possible just legisla- 
tion the forming of co-operative associations, manufacturing, distribu- 
tive, and mercantile. I would in every way give encouragement to the 
ownership of homes by working men. And pardon me for saying right 
here, that if 1 had been iu Congress, I would have given all the support 
in my power to the homestead bill of Mr. Wright. Another means of 
meeting the introduction of labor saviug machinery is by reducing the 
hours of labor. It is claimed that a reduction of the hours of labor means 
a reduction of the wages paid to labor, but history proves the contrary. 
The workingmen of Massachusetts earn more now that they only 
work eleven hours a day, than they did when they worked fifteen hours 
a day. There are three things which a man must have : He must have 
something to eat, something to wear, and shelter from the elements. 
Now, if a man earns only just enough to procure these three things, 
what is the use of producing any more than these three things % That 
again touches the question of supply and demand. The difference be- 
tween a barbarian and a civilized human being is the amount of educa- 
tion which one has over the other. I do not mean mere theoretical 
education, but I mean the education which a generation gives to an 
individual or to a race of individuals. Education gives to man men- 
tal necessities equal to the physical necessities which I have mentioned 
(of something to eat, something to wear, and shelter from the elements), 
so that the broader and more liberal the education, the greater are the 
various necessities of the individual. Therefore, it is politic for a State 
to give the greatest possible education to its citizens, iu order to make 
the greatest possible demand on the part of its citizens for the blessings 
of civilization. 

The Chairman. Would you confine that system of education to the 
rudiments? 

Mr. Litchman. No, I would not confine it. I would add the theory 
of the kindergarten system, and give a technical as well as a theoretical 
education. I would teach iu schools, as far as practicable (I understand 
the difficulties iu the way), and by the use of tools. I have a boy of my 
own about ten years old, and it is my purpose to teach that boy some 
trade. I do not care what the trade is, but I want to teach him some 
trade. I will give him (as far as God gives me ability to do it in a pecu- 
niary sense) the best education I can give him, but I will insist, so far 
as ray influence goes, that he shall learn some trade, so that when the 
hourof suffering comes, he will have the inner consciousness that he can 
go to the bench and earn the ruling wages, whatever they are. The 
brain which is given him at his birth, with the theoretical discipline of 
his studies in the public school, combined with the practical education 
which his trade gives him, will give him a living; at least, will give him 
an even chance with his companions, and that is all I can do for him. 
If the drift of things is to make a man a part of a tradesman, and not a 
tradesman, as in the olden time, he can, at least, be taught a portion of 
a trade at which he can secure his bread and butter. That is my prin- 
ciple. Education must be compulsory. Selfishness on the part of the 
poor will sometimes compel them to violate the law, but the law must 
be supreme, and must say that the good of the whole people shall be 
first observed rather than the necessities or selfishness of the individual. 



432 DEPRESSION IN LABOR AND BUSINESS, 

It reaches farther than the present. Every one of our boys, and I hope 
at some time every one of our girls, is going to vote, and the safety of 
the republic depends, in my judgment, upon an intelligent ballot. The 
danger to our republic is the attendance at the polls of men who are on 
the one hand the inferiors of the men who employed them, and on the 
other hand are too ignorant to understand the ballot which they use, so 
that they are in either case in the hands of designing men, who, through 
the power of the ballot which they wield, can step into power and fasten 
chains more securely around the workingmen. 

Now, coming to the question of the hours of labor, if under the old 
system of doing things it required a certain number of hours to do a 
certain amount of work, and if through the introduction of machiuery 
that same amount of work can be done in half the time that it formerly 
required, it seems to me that there is no excuse for working men the 
same length of time that they formerly worked, because the inevitable 
result of doing so would be to throw half the number of men out of em- 
ployment. In my own trade, the introduction of machinery has reduced 
the number of shoemakers in this State from 70,000 to 50,000. So that 
I say we can meet the introduction of labor-saving machinery first and 
above all by co-operation, whereby labor can own a portion of the ma- 
chinery, and second by reducing the hours of labor. As a proof of that, 
shoemaking in this State used to occupy about eleven months in the 
year. Now it occupies only eight months at the farthest, and in some 
instances only seven months, so that the men are idle from four to five 
months in the year. 

The Chairman. What causes that ? 

Mr. Litchman. Because in seven months they can produce enough 
to last for the year by machinery. If you decrease the hours of labor, 
then you have got either to increase the number of machines or the 
number of men. If you increase the number of machines, you give em- 
ployment to somebody to make the machines, so that the thing will 
even up. Now if all the work of mankind can be done by machinery, 
mankind should have the advantage of it. Here is a radical point 
which I propose to put in. I believe that the time will come when man- 
kind will have two Sundays in the week instead of one — one of them to 
devote to himself, and the other to devote to his God. He will have five 
days for labor and two days for rest. That may appear radical and 
theoretical, and all that, but I think it is perfectly logical. 

The Chairman. He will have one day to worship God, and the other 
day for recreation. 

Mr. LiTCHMAN; Exactly. 

Mr. Murch. One day to build up his physical condition ? 

Mr. Litchman. Exactly. A man who is engaged in exhausting labor, 
needs two days out of the seven for rest. I have the greatest reverence 
for the Christian religion, and I go to church when I cau, but I have no 
fault to find with the man who works six days in the week, and who 
takes the seventh day for absolute physical rest. I have no word of 
complaint against him. 

The Chairman. Can you give an illustration in any specific case of 
the evil effect of the convict labor system on any particular industry 
other than the shoe business % 

Mr. Litchman. Yes; lean give an illustration of it in the gilt-mold- 
ing trade of Massachusetts. A contract exists to-day under which 150 
men, or about that number, are employed in Concord prison in the man- 
ufacture of gilt moldings. In all New England, outside of the prison 
walls, there .is not that number of skilled workmen employed in the 



DEPRESSION IN LABOR AND BUSINESS. 433 

trade. On the testimony of a manufacturer in Boston, there are not 
over 90 individuals — men, women, and children — engaged in the trade. 
Now the contract price is 50 cents a day. The lowest wages for the 
same class of work outside would be $8 a week. The production of the 
prison is greater than the production outside. The firm that has the 
prison contract (on the testimony of the manufacturer to whom 1 refer) 
fixes the price at which the moldings are sold, and all the products of 
that trade have to be sold at the price fixed by the manufacturer of 
gilt moldiugs who has the prison contract. 

The Chairman. That is a monopoly. 

Mr. Litchman. The State-prison contractor has the monopoly, and 
yet it has proved a boomerang to the man who took the contract, be- 
cause he has failed through the accumulation of his stock. The whole 
system is pernicious, because while in good times the contract system 
gives the manufacturer au advantage by giving him his labor cheap, it 
sometimes destroys him in poor times through the accumulation of stock 
which he is unable to dispose of, aud he is bound for a certain number 
of men. The shoes produced by the East New York Boot and Shoe 
Company, which has the contract at the Albany penitentiary, are not 
excelled, in my judgment, except by those produced by two firms, one 
in New York and the other in Lynn. These are the only two firms 
whose goods equal the goods made in the Albany penitentiary. But, 
referring again to this gilt-molding contract, the effect of that contract 
(by the testimony of manufacturers and workmen alike, who have ap- 
peared before the committee of the Massachusetts legislature) has de- 
stroyed substantially that industry outside of the prison walls. 

The Chairman. How long has that contract been in operation ? 

Mr. Litchman. Since the latter part of 1877. 

Mr. Murch. Can you state anything in regard to the extent to which 
the truck system prevails in this State? 

Mr. Litchman. I think to a very slight extent. The Massachusetts 
legislature, at its last session, passed a bill compelling the payment 
weekly of wages, when demanded by the men, where the wages are less 
than $2 a day. I have no knowledge in regard to the track system in 
Massachusetts, but I have been brought in contact with it in other 
States, particularly in Pennsylvania. 

Mr. Murch. Have you ever heard anything in regard to the truck 
system in the granite works at Cape Ann J ? 

Mr. Litchman. I have not. I do not know whether it exists there, 
but it has not been brought to my notice. I have been informed that 
in Fall River the rules of one of the mills compel an employe to board 
in the corporation boarding-house, even though the employe be single 
and be living with his or her parents, or even though, if married, he 
owns his own house. 

Views of Mr. George B. Perry. 

Mr. George B. Perry appeared before the committee at its invita- 
tion. He stated, in reply to preliminary questions, that he is a compositor 
and proof-reader; that he resides in Boston and has resided there about 
seven years. 

The Chairman. The object of this committee is to ascertain, if we can, 
what has been the producing cause of the depression in the industries 
of the couutry, and especially in labor. State in a general way your 
views as to tho causes that have produced the depression in labor. 

Mr. Perry. That is a subject on which I am not prepared to express 
H. Mis. 5 28 



434 DEPRESSION IN LABOR AND BUSINESS. 

any decided opinion. My opinion on that subject is not well formed* 
and I have no suggestion to make as to the causes which have produced 
the depression. I am more conscious of the fact that the depression in 
labor exists. 

The Chairman. Is depression in labor shown in Boston to-day? 

Mr. Perry. The depression in labor is apparent at this time in some 
branches of labor more than any others. There is a slight improvement 
in the volume of business, although no improvement has taken place in 
the rate of wages paid. 

The Chairman. Are they the same now as they have been on an 
average for the last-five or six years? 

Mr. Perry. Very little if any advance has taken place. 

The Chairman. Do you speak of labor generally, or do you confine 
your remarks to your own branch of business? 

Mr. Perry. I speak of labor generally, because I consider myself 
posted as to the building trade, the engineer's trade, the cigar-maker's 
trade, the cigar business, &c. With the exception of engineers there 
has been no advance in wages, and with the engineers there has been 
only a slight advance. Nothing at all in comparison to the advance 
which would be justified by the increase of business. 

The Chairman. What is the rate of wages in these different branches 
of business? 

Mr. Perry. It is difficult to fix any scale of wages. They have been 
all the way from $lto $2.75. $1.75 a day would be a high average 
estimate. 

The Chairman. That would be the general average now for skilled 
labor? 

Mr. Perry. Yes; for skilled labor, such as carpenters. 

The Chairman. The average of wages has been pretty uniform for 
the last five or six years ? 

Mr. Perry. Yes, so far as my knowledge extends; but I can scarcely 
go back more than three years in these trades. 

The Chairman. Have wages an upward tendency, or are they stand- 
ing still, or being depressed? 

Mr. Perry. They are standing still. I do not think there is any de- 
pression in wages, but there is a movement for an advance in wages. 
The carpenters are now trying to organize with a view of seeking ad- 
vance of wages, as the volume of business in their trade justifies it. 
The tailors have succeeded, after along seasou of low prices, in establish- 
ing a rate of wages at a small advance;. 

The Chairman. By a strike? 

Mr. Perry. No. With one exception all the firms in Boston met 
their demands for an increase in wages and for a readjustment of 
prices, the advance averaging about 7 per cent. 

The Chairman. Is the business of this city generally sufficient to em- 
ploy all the men who are seeking labor and employment ? 

Mr. Perry. No ; I should judge not. Of course a great city like 
Boston attracts a great number of laborers from all parts, and there is 
nearly always an excess of labor. 
- The Chaikman. And that is the fact at the present time ? 

Mr. Perry. That is the fact undoubtedly in my own business, and I 
believe it to be a fact in nearly every other business. 

The Chairman. What is the average pay of compositors here ? 

Mr. Perry. The doctrine of averages is the most deceptive one that 
it is possible to go on. The fluctuations in the trade are very wide. A 
comparatively good workman may not be able to make more than $9 or 



DEPRESSION IN LABOR AND BUSINESS. 435 

a week in a printing office, and yet the same workman under other 
conditions can make $16 or $18 or $20 a week. 

Mr. MlTRCH. They generally work by piecework, do they not '? 

Mr. Perry. Generally; and then the most profitable work falls into 
the hands of comparatively few persons, and these few make high 
wages. 

The Chairman. Does it fall into their hands because they have more 
skill, or because of favoritism % 

Mr. Perry. From both causes. It needs a certain amount of skill to 
do certain work. At the same time, there is nothing exceptional 
about the skill, I do not use the word favoritism in connection with 
the matter. Perhaps it is a mere accident, or it may he a question of 
steadiness. The remedy must come from inside of the trade. The sys- 
tem which enables one man in the trade to make so much more than 
another man is an evil one, but it must be remedied inside of the 
trade. 

The Chairman. What remedy would you propose for it ? 

Mr. Perry. A remedy inside the trade ; a regulation by the men 
among themselves. The fault lies directly with the men for want of 
agreement among themselves. 

The Chairman. Do you mean to prevent underbidding'? 

Mr. Perry. No; it is a matter that is purely technical and cannot 
be easily explained. 

The Chairman. You have stated that you thought that so far as re- 
gards the employment of men and the prices of labor, the matter was 
at a standstill. Do you see any prospeGt of a better condition of 
things % 

Mr. Perry. Yes, sir ; I should judge so. 

The Chairman. Do you think that the improvement is going to be 
permanent or only spasmodic ? 

Mr. Perry. That is a question upou which I am not able to form an 
opinion. The upward movement has been so recent that it is impossi- 
ble to tell how far it may go on or how long it may continue. It is 
solely a matter of opinion. The improvement in business lias not been 
good enough to justify one in forming an opinion, but if I should judge 
from my own business, I should say that the improvement is not going 
to be great. 

The Chairman. What have you to say about the eight-hour law ? 

Mr. Perry. I believe the eight-hour law to be a great step forward, 
in every sense of the word, always supposing that there was a corre- 
sponding public opinion to sustain it. 

The Chairman. If it is a correct principle, public opinion ought to 
sustain it. 

Mr. Perry. Public opinion ought to sustain a great many things 
which it does not sustain. The only question in my mind is whether 
(with all the wish to see legislation expressed in that direction) it is 
altogether reasonable to suppose that any great result will follow from 
legislation which is in advance of public sentiment. On that question 
public sentiment is yet far in the rear. 

The Chairman. It is a little ahead of Congress, is it not f 

Mr. Perry. Not in that directiou, because the eight-hour law is a law 
of Congress, and public opinion is far in the rear of it. 

Mr. Murch. But the law has been constantly violated by the depart- 
ments of the government. 

Mr. Perry. They would not be able to violate it if there was public 
opinion to back up the law. If there was a strong public opinion in 



436 DEPRESSION IN LABOR AND BUSINESS. 

favor of the eight-hour law, it would not be disregarded. The law 
would be obeyed if it was not iu advance of public sentimet. I am sorry 
to say that the public is far less intelligent iu that direction than the 
framers and promoters of the law. 

The Chairman. Have you knowledge in regard to other trades in the 
city generally besides your own trade? 

Mr. Perry. Only generally. 

The Chairman. Not enough to give an opinion upon? 

Mr. Perry. Not enough to give an opinion upon. 

Mr. Murch. Do you know of the truck system prevailing to any ex- 
tent in this city or State? 

Mr. Perry. I had an interview with Mr. Carroll D. Wright, of the 
Bureau of Statistics, on that subject. My object in interviewing him 
was because, as a newspaper man, 1 was anxious to ascertain something 
in regard to the truck system in the State — I mean the system of pay- 
ing workmen in orders for goods instead of in money. Mr. Wright told 
me that in Massachusetts the system was not very prevalent except in 
one case, and that was at the granite works at Cape Ann. I went then 
to Mr. Dyer to inquire further, and he showed me some communication 
from there which indicated that the truck system is a great injury to 
the workmen, amounting in fact to a decrease of 25 per cent, in their 
wages. 

Mr. Murch. Is it made absolutely obligatory on the workmen to pur- 
chase all their supplies at the company's store? 

Mr. Perry. No ; I asked a nephew of Mr. French the question whether 
the workmen were compelled to purchase at the company's store. He 
said no, that they could do exactly as they pleased, but that the com- 
pany's store sold goods as cheaply as anybody else, and that the men 
did purchase there. On the other hand, men who worked there told me 
that there is no compulsion on them to purchase goods at the company's 
store, but that it is advisable for them to do so. 

Mr. Murch. At tbe risk of losing their employment ? 

Mr. Perry. It was not so expressed to me. 

Mr. Murch. But they find it their policy to deal at the company's 
store ? 

Mr. Perry. Yes; it was expedient for them to deal there. 

Mr. Murch. Is that system being practiced by the Cape Ann Granite 
Works exclusively ? 

Mr. Perry. According to Mr. Wright. He said that that was the 
only place that he could lay his finger on in Massachusetts where the 
truck system was carried on. There are a number of granite firms on 
Cape Ann besides the Cape Ann Granite Company. 

Mr. Murch. Do the firms doing business at Cape Ann own the tene- 
ments occupied by the workmen f 

Mr. Perry. I was not able to ascertain. 

Mr. Murch. Then you cannot say positively, from your own knowl- 
edge, that this truck system exists on Cape Ann. You only know it 
simply from what you hear? 

Mr. Perry. I only know it from what I hear. I look upon it as a 
great evil. 

This closed the sittings at Boston. 

The following communications were received and ordered to be printed 
with the testimony : 



DEPRESSION IN LABOR AND BUSINESS. 437 

Roo^r 1G, 170 East Madison Street, 

Chicago, August 1, 1879. 
The chairman and gentlemen of the committee to Inquire into the causes of 
and find the remedy for, the depression of labor and business : 

The proximate cause of the protracted depression since September, 
1873, was the wide-spread prevalence at that time of miscalculation or 
bad calculation and extravagance in meu's business and affairs. This 
common error of man spreads as prosperity increases, and is apt to be- 
come epidemic upon any sudden increase or inflation of a people's prop- 
erty or wealth. It was epidemic and spreading from the war of the 
rebellion to the panic of September, 1873, when it reached its height, 
and there was a sudden change for the better, such as a chilling- 
frost brings to cities which are stricken with the yellow plague. This 
improvement has continued to the present time, beiug supported and 
carried on at the dictation of financial common sense, which naturally 
springs to man's relief when he feels the touch of pinching poverty. 

The remote causes, such as the war and the legislation with sole ref- 
erence to that emergency and the consequent speculation of the masses 
1 will only mention, not dwell upon. 

The remedy is good calculation, hard work, and hard saving in equal 
parts, taken regularly and faithfully until the patients have all reached, 
as Bobby Burns says, u glorious independence." 

An enthusiastic wisher for wealth once read in a paper : u How to 

get rich for $1. Address, , , P. O. Box No. — , city." 

The fellow scraped up a dollar and sent it on. By due mail he received 
a letter in reponse, which he opened to read only this : " Work like h — 1 
and don't spend a cent." He was just a little disappointed, as all are 
bound to be who hope to acquire wealth by wishing, legislating, threat- 
ening, destroying, or any other honest means, except by diminishing the 
amount they consume, or increasing the amount they produce, or both. 
Very respectfully, yours, 

R. P. BLANCHARD. 



To the Chairman of the Congressional Committee, Tremont Rouse, Chi- 
cago, 111. : 

I am requested to give my views of the condition of labor, the eight- 
hour movement, the panic, cause of depression, &c. 

As to the eight-hour movement, I can give a scrap of personal history 
and expedience. 

In the year 1868 a law was passed making eight hours a legal day's 
work. At that time I was the proprietor and general manager of a 
large manufacturing establishment, known as the " Chicago Steam En- 
gine Works"; employed about 100 men. When the law came into force, 
I called the men together; said to them that, as the property was mine, 
I should have all the say as to its general management; that on the sub- 
ject of wages they had as much to say as I had; but as to the number 
of hours of labor, they having the labor, should have all the say. I 
asked them to agree among themselves as to the number of hours of 
service. I also informed them that I was in sympathy with the eight- 
hour movement, and would gladly give it a fair trial. The men decided 
to work on the eight-hour plan, and I so ran the works for about eight- 
een months, and until I sold out and leased the establishment to other 
parties. 

As to the working of the plan I was fully satisfied — it worked like a 



438 DEPRESSION IN LABOR AND BUSINESS. 

charm, as the common saying goes. I gave the subject careful study, 
and became fully satisfied that, certainly during the fall and winter 
months, the short days, the men did more and better work than they 
did under the ten hour plan; and the reason to me was this: many of 
them lived long distances from the works; a cold, or hastily-prepared 
breakfast, a hard run to be in time, unfitted them for their work, and 
the long days dragged in spite of their willingness to do me a good, 
honest day's work. I saved largely in lights, heat, &c. 

As to wages, they are not permanent, and cannot be made so; they 
change and always must change, as the facts of supply, demand, 
and the great tides of commerce come and go. Capital has always so 
planned that labor should have little more than bare existence needs, 
and this much the laboring man must have, no matter whether the 
hours are twelve, ten, or eight. The history of the past teaches this so 
plainly that none need mistake. 

The plans heretofore carried out for the purpose of fixing wages have 
been oppressive, cruel, and brutal. Capital has said, <•■ I will pay you 
so much; it will keep you alive, and more I will not pay." Capital 
made both ends of the bargain — fixed the hours of service, fixed the 
amount of wages, and then said, "You can accept or starve." 

Some time since the Chicago Tribune gave an article — one of its heavy, 
solid ones — no doubt prepared by Joseph himself — giving figures and 
calculations to prove that a family, man, wife, and three or four chil- 
dren, could live on 35 cents per day. What nonsense! The laboring 
man should have something to say on the question of wages. T tell 
them it is their matter, and they should ascertain what amount they need 
to give them a decent home, give food and clothing for self and family, 
school, church, and amusement opportunities, and then demand wages 
that will give them these. It is, and always has been, a matter of sur- 
prise to me, that the labor class in America have submitted to the 
oppressipn so long. They are largely in the majoritj 1 -, have the power 
at the polls, and can have all their rights crystalized hi to laws. But this 
power is drawing together and centering, in my opinion. Changes are 
rapidly taking place, light and knowledge are penetrating the dark 
places, and I believe a revolution is near at hand. God hasten the day, 
when the laboring man shall no longer be a slave to money. 

"Is business improving, and are times getting better P 

A certain class of papers are proclaiming that business is improving 
rapidly, and that now the country is in a prosperous condition. There 
are good reasons why we find such reports in such papers. They are 
found generally in the papers that favored Shermau's resumption policy, 
sustained the administration in all it did, and predicted that wonderful 
blessings w^ould be showered upon the land by the operation of the re- 
sumption and contraction policies. The managers of these papers must 
contend that all is better; they will trust all things into their line of 
argument. 

We are preparing for a great, election contest. It is a question of life 
and death to the party in power. If they go into the contest with the 
times no better, and if their claim that resumption would bring pros- 
perity proves to be a fraud and cheat, they will forfeit the nation's con- 
fidence, and will, in the election of 1880, be completely wiped out, I 
am a Republican ; have been since the birth of the party, and say this 
from my standpoint. Hence the frantic cries of " grand good times 
again," " plenty of work for all," " great improvement since resumption." 
This is the disgrace of American journalism. In place of reflecting the 
times, giving facts and truths, all things are twisted to suit their pur- 



DEPRESSION IN LABOR AND BUSINESS. 439 

poses. No, I answer j the times are really no better. The little changes 
here and there are spasmodic. There can be no permanent change, in 
my opinion, until the financial policy of the administration is changed. 

Now as to what should be done. Every man in America has at least 
one plan that differs with every other plan. Mr. Gage gave the com- 
mittee his plan. The trouble with that is, " it smells too strong of the 
shop." We all know what the bankers would do if they could have their 
way. They would destroy all money but that of their own creation. But 
the people will never again consent that the bankers should have con- 
trol of our finances. They have not forgotten 1857 and what followed. 
The banks at that time and before had made the money for the people. 
Their currency was founded on that wonderful " gold basis " of which 
we have heard so much, and it turned out to be a fraud and a cheat, as 
it always has and always will ; hence the pauic and the great ruin and 
destruction that followed. Had the paper money of that time been 
greenbacks, full legal tender, the panic, in my opinion, would never 
have come upon us, and the suffering and anguish would have been 
spared to the people. 

As to plan, Mr. Gage says, " repeal the legal-tender act and retire the 
greenbacks." I say prohibit the circulation of all paper money except 
that created by the government and made full legal tender. This is 
what the people will demand. Let the government issue to any party 
and to any amount on surrender of bonds. Make the currency so issued 
money and not a promise to pay money. It is nonsense to talk of re- 
deeming money with other money. Eedeem paper money as you redeem 
gold, in the payment of taxes, debts, in food, clothing, and in all things 
that the world has for sale. The laws of demand and supply will regu- 
late the quantity. All forms of property are held and controlled in this 
way. Honest money is never more than the shadow or representative 
of property, and will be governed in the same way and by the same 
laws. 

As to the amount now in use, in my opinion there is not half enough 
to do the business this active driving people are ready and can do, and 
this, I judge, is specially true of the West. We have all along been 
trying to bore a two-inch-auger hole with a gimlet, and so the manufac- 
turers, the active business men, the money users, have been at the 
mercy of the money handlers and money lenders. 

As to silver, by all means put the silver dollar an an equal footing 
with gold ; make no discrimination whatever; give to the New World the 
full benefit of the great silver and gold treasure hid away in the moun- 
tains an* valleys of the West; do not permit the law makers to legis- 
late against American interests at the dictate of a foreign money power. 

" What produced the panic of 1873 P 

The main force, the one that stands out above all others combined, 
was the operations, the manipulations of the money power ; both Amer • 
icau and European using the Secretary of the Treasury and the Ad- 
ministration as its tools. 

The infamous refunding act — the plan of contraction. 

The conversion of government currency into interest-bearing bonds. 

The destruction of one-half of the currency of the nation. 

These forces were put into operation in the interest of the infernal 
shylocks, and to the ruin and destruction of the active business men of 
the nation. 

Before permanent and solid prosperity can come an entire change 
must be made in the financial policy of the government. 

The great labor interest must have justice done to it. 



440 DEPRESSION IN LABOR AND BUSINESS. 

The management of the nation's finances must be taken out of the 
control of the money ring. 

The growth and progress of the nation must no longer be measured 
and held in check by the amount of gold there is dug out of the dirt. 
Very respectfully, 

C. S. ENGLE. 
Chicago, August 1, 1879. 

I have lived in Chicago twenty-three years; was a manufacturer for 
thirteen years ; and have been in the real-estate business for about ten 
vears. C. S. E. 



San Francisco, August, 1879. 
Hon. H. B. Wright, 

Chairman Congressional Committee on Labor, &c: 

Sir: Herewith please to accept and lay before your honorable com- 
mittee my views on labor depression. 

Autonomous states, by means of changeable facts, may go on estab- 
lishing a system of government where authority is contained in law and 
restrained by law, as liberty is contained in right and measured by right ; 
but the state itself, even the most democratic — even that which is ruled 
by all the citizens — cannot give or take away the right, inate to our 
personality. 

By a series of political contracts, the citizen should harmonize his 
individual sovereignty with the sovereignty of the other citizens of the 
state ; but in these contracts men cannot alienate inalienable rights. It 
is a contradiction to say the intelligence shall not think and that the 
will shall not desire. Man possesses a right to be in society the same 
as in nature, to be before the law the same as before the universe — a 
person free and responsible. 

The organization of human society should not be perpetuated when 
it contradicts the idea — the spirit of the times, of the century — because 
it may be merely the product of a historic fatality, and if the only thing 
worthy of being known is that which happened in the world, and not 
that which exists in the soul, there is no science of right possible; and 
if that be so, then there is no hope of reform, because every ameliora- 
tion proceeds from the contrast offered between the reason, which rises 
to pure justice, and the imperfection of reality. 

In these contests between reason and reality all the reactionists cling 
to the historical school. 

Kings born to command a slavish horde; military aristocracies which 
live by war; feudal aristocracies who watch as it were a thunder-cloud, 
the idea of right passing over the brow of their serfs — all oppressors, in 
fact, invoke the historical school and its sophisms to rivet anew the 
chains of the people and gild the diadems of despots. 

Should one of the people, therefore, suggest a new mode of legisla- 
tion, it is to be expected that the old cry against experimental legisla- 
tion will be sounded and history invoked as the executioner. 

And yet, as the life-blood of this great Eepublic is being absorbed, as 
centralization each day becomes apparent, as the anaconda of monopoly 
is tightening its folds around our struggling freemen, as imperial ftome 
is being by our impetuous Latius re-established, we should not pause, 
even if it be " experimental legislation." 

Our "middle class" of citizens has almost disappeared ; a few have 



DEPRESSION IN LABOR AND BUSINESS. 441 

been absorbed into the "rich class," the multitude into "tramps," and, 
to use the language of the great statesman, Richelieu, "there is sloth 
in the mart, schism within the temple, brawls festering to rebellion, ami 
weak laws rotting away with rust in antique sheaths. 7 ' 

A voice from the Orient asks the cause of labor depression ; the echo 
from the Occident replies, centralization, monopoly, C;esarism. 

Take, for illustration, our* so-called national banks. They deposit, as 
security, our national bonds, on which they draw interest; they loan 
their notes on which they draw interest; with the friction and abrasion 
common to all currencies there are large amounts annually lost, which 
swell the profits until combinations of such corporations, with the power 
that wealth bestows, dictate to our national Treasury. 

I must be allowed to say to you, gentlemen of the Congressional com- 
mittee, that I think a great error is committed on this question of 
fiuance, an error which pervades the whole body politic, and has its 
effect directly upon the poorest man in the land; these banks of issue 
should be closed at once and forever. The government shouid issue 
sufficient money for its citizens, and establish a uniform rate of inter- 
est; and when the immense proofs which now accrete to banking cor- 
porations shall flow into the national Treasury and overflow its coffers, 
it will lighten taxation and afford millions for public improvements. 
And when we issue ic money," and not a promise to pay money, with its 
face value not restricted tor any use whatever, exchangeable at will 
into national bonds, bearing a common and uniform interest, the nations 
of the Old World will receive the same as readily as they do our bonds 
or gold for customs. 

And why ? Is it not money ? It matters not whether paper or metal, 
it carries with it the indorsement of over forty millions of freemen, and 
is exchangeable for anything within the length and breadth of the com- 
mercial world. 

The government should loan the States, the States should loan the 
counties and municipalities, and those localities should loan their citi- 
zens, taking in each case such security as would be offered to a private 
corporation now. 

Let the uniform rate of interest everywhere be — per cent, per annum, 
and being exchangeable at will into interest-bearing bonds, the supply 
and demaud would regulate themselves. Then industries could be in- 
augurated and carried on with a solid basis'; the profits not being all ab- 
sorbed by the usurer, capital could afford to remunerate labor; a combi- 
nation of bauks locking up their money to create a temporary stringency 
for their own sordid end would be impossible, and the many evils which 
act directly upon our citizens in times of contraction would be a tiling 
of the past. Employment woul'd be abundant, because with a steady 
supply of money at a low and uniform rate of interest manufactories 
would flourish and the class of producers increase. I have neither time 
nor space to enter minutely now into details, nor do I class the money ed 
corporations as the only great evil ; all of our great corporations should 
be subject to and controlled by rigid laws, and our monopolies abolished 
as far as possible. The centralization of power should be jealously 
guarded against. 

The power of vigilance as a tribunate, as an ephorate joined to the ex- 
ecutive power, charged to watch the execution of the laws, when such 
officers charged to execute the laws fail in the performance of their d uty — 
such a tribunal should suspend them and appeal to the people. 

My fellow workinomen on this coast expect me to say something on 
the Chinese question. I will, therefore, state that the thousands of 



442 DEPRESSION IN LABOR AND BUSINESS. 

Mongolians already here have, by their manners, customs, and religion, 
caused us to look with alarm at the possibility of the influx of countless 
hordes of such people and the ultimate effect on the welfare and pros- 
perity of our country. Yet as this matter is now purely local, affecting 
but a small area of country over which a labor depression exists, the 
Chinese question cannot be said to be a factor in the cause except as re- 
gards perhaps the Pacific coast, and its effect is an integral part in its 
reflex action upon the whole country. 

In my judgment our statesmen should take a broader view of this 
question, and by wise and timely legislation avert impending disaster. 
This Chinese question, like other ills complained of in other localities, 
should have due consideration, but the general points to which your at- 
tention is invited in this paper are general evils. 

The tendency to centralize power has been apparent in all branches 
of the national and State legislation, notably within the last twenty 
years. Special legislation has been too frequent for the general good 5 
valuable franchises given with scarcely an attempt to disguise the cor- 
rupt manner in which they were obtained, subsidies voted for question- 
able purposes, the effect of nearly all of them being to drive out that 
healthy competition so necessary to the life of trade, and support monop- 
olies that are in direct conflict with the general welfare. 

To successfully compete with these evils, men in the various branches 
of trade and commerce have been driven into private corporations to 
assure themselves pecuniary strength sufficient for success in their 
enterprises. These combinations, appreciating the immense power de- 
rived from money, have gradually, but surely, encroached upon their 
weaker competitors in business, and have, too often, employed their 
position to unjustly crush out their rivals ; the ultimate result being 
that the rich became richer and the poor helpless. 

Our transportation lines by land aud water have become a vast net- 
work of monopoly, and in many instances combined oppression, wring- 
ing from the producers the last farthing possible .to obtain. Large 
laud-owners are imitating, in their rapacity and greed, the titled gentry 
of the old world. Tax-gatherers corruptly discriminate between the 
rich and the poor, and thus the multitude are ground between the upper 
and nether millstones into the dust of poverty. They struggle year 
after year on the farm or in the shop, vainly opposing the results of 
these combinatious, until, unable longer to pay the tithe, they sink to the 
level of a " tramp.' 7 

Just as long as the purity of elections is sustained, as long as the 
judicial ermine is uncontaniinated, so long will the people respect the 
law, and the result will ever tend to free progressive government, nec- 
essarily republican in form, for one is a synonym for the other. The 
diversified interests of a sectional nature throughout this vast domain 
embraced within our country's boundaries, necessarily oppose them- 
selves with, sometimes, irresistible force to the relations of this idea, 
but the nature of the earth and the character of the communications 
between those sections, the necessity all men feel to join in bonds of 
common laws, give assurance that the education of the masses must 
found each State on a republic, internally, and all States for purposes 
of external relations in federations. 

Is the purity of the ballot-box to-day like Cassar's wife? Is the judi- 
cial ermine spotless ? 

Which of you gentlemen composing this committee can lay your 
hand upon your heart and truthfully reply in the affirmative ? What is 
the ultimatum of the negative? I dare to express my opinion, since 



DEPRESSION IN LABOR AND BUSINESS. 443 

you have come so far to ask it. When the ballot-box becomes a farce*, 

when the very mention of law provokes a sneer on the countenances of 
the -masses, when our courts and executive offices are surrounded by a 
dense atmosphere of fraud and corruption through which the complaints 
of the people cannot penetrate, then are we treading on the brink of 
revolution. You may eall me communist, visionary sand-lotter, or 
tramp; but you, gentlemen, may be certain that the very stillness 
of the air gives token of the earthquake. All without is as the marble, 
smooth, while all within is as rotten as the carcass it contains. 

Committees appointed to investigate a certain subject, too often ap 
ply at the wrong house for information ; and in the present case, I ask 
you, where is the best place to gather the information for which you are 
in search ? Is it to be found in the palaces of the rich, where with lux- 
urious ease you can discuss the pangs of hunger and its cause ? Or will 
you be able to discern it in the columns of the daily press, whose para- 
graphs are founded in truth, whose assertions are always based on 
honor ? They would scorn to mislead you ! 

I trust, gentlemen, that you will not deem me a cynic or misanthrope. 
I have, at last, found one of our institutions (republican) on which we 
can rely ! For who would accuse a newspaper of to-day with uttering 
an untruth; of aceopting largesse; of being subsidized; of mislead- 
ing the masses; of blackmailing the rich: of dealing in billingsgate 
by the wholesale? Not I, for one. They own presses and can tbrow T 
more mud than I could. Yale, immaculate knights of the quill ! 

I tell you for a truth that, in spite of our "solid men," our "solid build- 
ings," and our " solid banks," there are not less than five thousand 
hungry people within the radius of your vision when you take the even- 
ing air on the promenade on the, summit of the Palace Hotel. Did I say 
hungry ? I should say literally starving ! One meal to-day, and one the 
day after to-morrow (if they can obtain it). 
Eespectfullv, 

H. T. HOLBROOK. 



Sidney, Iowa, October 20, 1S79. 
To Hon. H end rick B. Wright, 

Chairman Congressional Labor Committee. 

Washington, D. C. : 
Dear Sir: I have investigated the records showing the indebted- 
ness of Fremont County, and rind the following facts and figures, viz : 

Land mortgages recorded iu last three years. 3.000, amounting in aggre- 
gate to about " $2,100,000 

Chattel mortgages recorded iu two years, 1,900, amount 650, 000 

Judgments and taxes 750, 000 

Private debts 1,500,000 

Total 5,000,000 

Assessed value of property in county 4,000, 000 

The foregoing figures are correct, as shown by the records of Fremont 
County, and the best information that can be procured of the private 
indebtedness of same ; and we believe that said county is the best and 
richest in the State in agricultural wealth ; population, about 20,000, 
of as industrious and economical citizens as can be found iu the State. 
Yours, truly, 

GILES COWLES, 
Ex County Treasurer Fremont County, Iowa. 



444 DEPRESSION IN LABOR AND BUSINESS. 

Hon. Hendrick B. Wright, 

Chairman Congressional Committee 

on the Depression of Labor : 

Sir : At your request, I gladly avail myself of the opportunity so 
kindly presented, to lay before your honorable committee a few thoughts 
which I think have a practical bearing on the subject-matter of your 
investigation. As the general question as to the causes of the recent 
depression of labor opens up a broad and almost endless discussion, I 
shall beg leave to confine myself strictly to what I consider one of the 
causes, and wherein remedial legislation will prove beneficial. 

I allude to the necessity for a reduction of the hours of labor. The 
subject came before Congress in 1868, in which year, what is known as 
the national eight-hour law went into effect. Though still on the 
statute-book, its observance is not generally nor uniformly enforced. 
As a recommendation from your committee could not but have weight 
in the struggle being waged by workingmen to secure its enforcement, 
I shall briefly sketch some of the arguments with which we press the 
matter upon our legislators. Dismissing the question at once whether 
a law remaining unrepealed should not be enforced, let us see if good 
reasons do not exist why it should be enforced upon its own merits. 

First. We ask it in the name of political economy. All political econ- 
omists are agreed that the standard of wages is determined by the cost 
of subsistence, rather than by the number of hours employed. Wages 
are recognized as resulting from the necessary cost of living in any 
given community. " The natural and necessary rate of wages" of which 
we sometimes hear, is such a rate as will supply, to use the words of 
Adam Smith, " Not only the commodities that are indispensably neces- 
sary for the support of life, but whatever the custom of the country 
renders it indecent for creditable people even of the lowest order to be 
without.'' 

The cost of subsistence for an average family determines the rate, and 
it is for this reason that single men can save more if they will. They 
reap the advantage from being exceptions to the general custom. 
Women's wages are always lower, because custom has not made others 
dependent upon them. Wages have been and will be regulated by ex- 
isting conditions of liviug. In 1444 the rate of wages in England for 
agricultural labor, averaged about four pence a day, but the price of 
board was only two pence. In Rome under Diocletian and Constantine 
Chlorus, an agricultural laborer received, on an average, equal to twelve 
and a half cents a day, but the cost of subsistence was in proportion. 

Second. We ask it in the interest of civilization. The battle for the 
reduction of the hours of labor is a struggle for a wider civilization. Civ- 
ilization demands a prosperous and contented people, with increased 
wants and means to supply them. To refuse aid to willing hands to cul- 
tivate our idle lands, to import a servile race, that thereby the cost of 
subsistence may be reduced to a far lower standard and a lower level 
for all be reached, and to insist on long hours of toil when thousands are 
standing idle, all are deadly blows aimed at the very foundation of 
modern civilization. 

A decrease in the hours of labor means rest, and rest is invariably ac- 
companied by increased wants. Release the poor drudge in the mine 
or the factory from his leng hours of toil, and give him daily hours of 
relaxation and leisure, and you at ouce raise him in the social scale. 
Rest cultivates. 

We insist that every reduction in the hours of labor heretofore made 
has elevated the working people ; that increased leisure has invariably 



DEPRESSION IN LABOR AND BUSINESS. 445 

produced new wants, has added to the necessaries of life, and conse- 
quently bas raised the social coudition of the people. The setting apart 
of one day in seven for rest wherein no man shall labor, is a prime factor 
in the growth of civilization. We never hear the charge that wage 
workers receive seveu days' pay for six days' work, simply because con- 
scientious conviction has become hardened into national custom. The 
cost of subsistence — what will support a family, not what equity requires 
— is the test by which the standard of wages is determined. For once the 
reformer and the political economist agree, and the question arises, 
Shall eight hours a day, like six days a week, become firmly fixed as a 
national custom, so far as the government can establish it '? 

The whole history of the short-hour movement in England proves con- 
clusively that every reduction of time in the United Kingdom has iuva- 
riablj 7 been followed by an increase in wages. When the agricultural 
laborers in certain counties of England secured additional hours of rest, 
but a short period was needed to see a marked difference iu their social 
condition. Flowers began to blossom around their cottage walls, the 
broken gate was mended, and the garden more carefully cultivated. 
Inside of those humble dwellings where the laborer had formerly entered 
at the conclusion ot a long day's labor only to throw his weary body 
down to rest, articles of comfort began to come in, and a general feeling 
of manliness and pride was awakened. With increased comforts came 
increased wants ; increased wants brought a higher cultivation and a 
higher standard of wages than in those countries where the hours had not 
been reduced. 

Third. The changed relations between production and consumption 
demand it. Should the changed condition of our industrial system, 
arising from the rapid development ot mechanical appliances, whereby 
hand labor has been so largely superseded, call for remedial legislation? 
Political economists recognize the evil, and propose to meet it by such 
measures as will preserve to the people what custom has heretofore ren- 
dered it indecent to be without. To do this less hours of daily toil are 
essential. A reduction of hours, means less idle hands, more persons 
profitably employed. By increasing the number of employed, consump- 
tion will be stimulated, overproduction checked, and a more balanced 
relationship between the two established. 

In the manufacture of cotton fabrics one girl to day can do what two 
generations ago would have required the united labor of 100 women, and 
in woolens the use of machinery has laid aside 70 per cent, of the labor- 
ers. In cutting and harvesting grain, one man now does the work that 
formerly would have required 384 men to perforin. In Massachusetts 
the effect of machinery is strikingly shown in the boot and shoe trade. 
In 1845 the number of hands employed, 45,877, produced 20,896,312 
pairs of boots and shoes ; in 1875 the number of hands employed, 48,090, 
produced 59,762,866 pairs. In thirty years the total production has 
nearly trebled, while the number of persons employed is but slightly in 
excess of what it was in 1845, and far below the number employed in 
1855, when the census showed 77,827. 

From 1865 to 1875 the number of establishments in this trade in 
Massachusetts increased from 206 to 1,461. The examination of the 
tables given in the State census shows that in the ten years cited, estab- 
lishments have increased sevenfold ; capital invested has nearly doubled : 
the value of stock used has increased nearly two thirds; the value of 
goods made has increased three-fifths; the number of pairs made has 
increased nine tenths. Yet in the same period the number ot persons 
employed iu this one industry has fallen off from 52,821 to 48,090! 



446 DEPRESSION IN LABOR AND BUSINESS. 

If we look at the other industries, wherever we find an increased num- 
ber of persons employed we will notice tbat the increase in production 
is far greater in proportion. The conquest of man over nature is rapidly 
augmenting in results, but the question whether the people are in like 
measure benefited has but to be asked to be auswered. Are peace and 
contentment more promptly realized ? Are the pangs of hunger more 
readily alleviated •? Are the necessities of life more easily attained ? 
or do privation and poverty remain as marked as in the preceding cen- 
tury ? Has not what improvement exists iu the material condition of 
the workingman directly followed from the additional leisure acquired 
through reduction in the hours of labor, rather than from any other 
source whatever? 

Machinery in the boot and shoe trade in Massachusetts has increased 
productions, swelled the capital invested, and augmented profits, but 
has it lessened the toil of the poor drudge employed, brought increased 
comfort to his hearth, or placed him in any higher social condition ! 
Labor has been saved to the employer only ; the tireless muscles of the 
inanimate machine have not only displaced the living muscles in many 
cases, but in others have increased the strain upon them by requiring an 
increased speed to keep up with the machine. 

Professor Huxley says that the seven and a half millions of workers 
of England can produce as much in six months as would have required 
one hundred years ago the entire working force of the whole world one 
year to equal. Mr. Gladstone, in a careful estimate of the production 
of wealth in Great Britain during the present century and up to the 
year 1870, finds that the aggregate that has been acquired in this period 
is equal to that of the whole previous period irora the landing of Julius 
Csesar, 55 years before the birth of Christ, and that the wealth pro- 
duced between 1850 aud 1870 was fully equal to that of the first half of 
the present century. 

Shall not labor enter into the benefits arising from this increased 
wealth more directly ? 

John Stuart Mill says : 

It is questionable if all the mechanical inventions yet made have lightened the day's 
toil of any human being. They have enabled a greater population to live the same life 
of drudgery and imprisonment, and an increased number of manufacturers and others 
to make fortunes ; they have increased the comforts of the middle class, but they have 
not begun to effect those great changes in human destiny which it is their nature to 
accomplish. 

Sir, your committee, I trust, will recognize the importance of this 
question of the reduction of the hours of labor. The great industrial 
revolution which we are undergoing, the change of humau activity from 
warlike to industrial pursuits which constitute the essential character- 
istic of modern civilization, and the happiness of the producing classes, 
which forms the foundation of a republican form of government, alike de- 
mand your consideration of this question. The enforcement of the national 
eight-hour law would be accepted by workingmeu everywhere as a signal 
proof that their prayer has been heard and the first step taken toward 
the universal acceptance of eight hours as a normal day's work. 

It was to the government that the credit is due for the reduction from 
eleven and twelve hours to ten iu the order issued by President Tan 
Buren, which I herewith append. May we not hope that the government 
may also follow in his footsteps, and further modern civilization and 
human happiness by establishing eight hours as a day's work in all ua- 



DEPRESSION IN LABOR AND BUSINESS. 447 

tiorral workshops, thereby preparing for its adoption as a national cus- 
tom •! 

I remaiu, sir, very respectfully, 

SAMUEL C. HUNT. 
Boston (Charlestown), Mass., 

November 10, 1879. 

In the year 1810 President Van Bnren issued an executive order lim- 
iting the actual working time of government employes to ten hours per 
day. The following is a copy of its official announcement in the Boston 
navy-yard : 

Order for ten hours on all public works. — By Martin Van Buren, President of the United 

States. 

general order for the regulation of labor est the navy-yards. 

Navy-Yard, Boston, Mass., 

, April 10, 1840. 
By the direction of the President of the United States, all public establishments will 
hereafter be regulated as to working hours by the ten-hour system. The hours of 
labor in this vard will, therefore, be as follows, &c. 



Millwood, Westmoreland County, Pa., 

December 30, 1879. 
Hon. Hendrick B. Wright, 

Chairman Committee on Labor, &c; 

Dear Sir : I have your favor 24th ultimo, in which you ask me to 
answer the following questions: 

1st. What, in your judgment, produced the depression of the financial 
and business affairs of the country in 1873? 

2d. What was the effect of that disaster on labor ? 

3d. What are your views as to the propriety of withdrawing the bank 
currency and supplying its place with legal-tender notes ; such notes 
as are commonly known as greenbacks? 

4th. What is your opinion as to the levy of an iucome tax? 

5th. What remedy, by way of national legislation, would you propose 
to cure the evils which the industries and labor of the country are suf- 
fering under? 

For many years prior to the failure of Jay Cooke & Co., which event- 
inaugurated the panic of 1&73, the governments, the corporations, the 
merchants, the owners of manufactories and mines, the farmers, the 
owners of property, and men of scientific and literary attainments in this 
country enjoyed a credit which was almost limitless. This credit re- 
sulted in the creation of debts of such immense magnitude as to defy 
the comprehension of most men. Their vastness can be appreciated 
only by aggregating them ; I will therefore enumerate them as they now 
exist, premising they were greater in 1873 than at present, for the rea- 
son they have been since then largely reduced by proceedings in bank- 
ruptcy, and but few new debts have been made : 

Our Federal Government pays interest on i $1 , 900, 000, 000 

Our State governments pay interest on 370,000,000 

Our city governments pay interest on 1, 000, 000, 000 

Our railroads pay interest on 4, 600, 000, 000 



448 DEPRESSION IN LABOR AND BUSINESS. 

Our mining, manufacturing, and navigation corporations pay interest 

on $1,000,000,000 

Our national banks pay interest on deposits 700, 000, 000 

Our national banks pay dividends on their capital stock 400,000,000 

•Our savings-banks pay interest on deposits 1, 500, 000, 000 

Individuals have the deposits and the capital stock of the national and 

savings-banks, borrowed, and pay interest on it 2, 600, 000, 000 

$14, 070, 000, 000 

In addition to this vast sum, nearly every county, township, school 
district, borough, and most men of mature years are in debt and pay 
interest. 

It is manifest from this array the aggregate of the government, cor- 
porate, and individual debts of this country upon which interest ac- 
crues are not less than $15,000,000,000, and may be twice that amount 
at this time. The rate of interest on them ranges from 4 to 12 per cent., 
and the average rate is probably not less than 8 per ceut. per annum. 
With the exception of the debt of our Federal Government, the money 
received for the remaining debts was invested in the construction of 
railroads and other means of transport, in extending the area devoted 
to agriculture, in the creation of new manufactories and increasing the 
capacity of those in existence, in multiplying the number and capacity 
of our mining establishments, and in the erection and construction of 
beautiful and substantial public and private edifices and improvements. 
These investments of the money borrowed met the approval of the lend- 
ers, and gave to the people of this country the means to produce nearly 
everything consumed by humanity, with less physical effort than any 
other nation. This conviction must have been enjoyed alike by lenders 
and borrowers, for the reason that production at minimum cost is, in the 
opinion of all inteligent men, the only way to accumulate wealth, and 
without acquiring wealth the borrowers would be unable to pay interest 
or principal of their debts. There was no other basis for the boundless 
credit which enabled our people to incur a debt unparalleled in its mag- 
nitude. The farms prepared for cultivation, the manufactories and 
mines created for the fabrication of those things necessary to discharge 
the duties of life, the railroads which penetrated every portion of our 
country, constructed to distribute cheaply and rapidly the products of 
labor by the money thus borrowed, would all be worthless unless they 
could be utilized in the production of those things consumed by human- 
ity, with less labor than other nations. In view of the fact we agreed 
to pay a rate of interest on these debts about three times as high as the 
rate paid by the people of Great Britain and Europe, our rivals in nearly 
every product of our soil, our mines, and our manufaetories, and in view 
of the truth the rate of interest is the arbiter of the cost of every com- 
modity produced, it became manifest in 1873 that our farmers, our 
manufacturers, the owners of our mines, and the millions who labored 
for and were wholly dependent upon them for those things essential to 
their existence, were unable to realize out of their products a sum suffi- 
cient to meet the demands of their creditors for interest, and, as an inev- 
itable sequence, their property diminished in value, and the credit 
they previously enjoyed in consequence of the belief in their ability to 
produce in defiance of all competition was dissipated, and the fear of 
loss produced the panic of that year. 

Admitting the ability of the producers of our country to produce all 
the commodities which result from the cultivation of the soil and the 
operation of our mines and manufactories with less labor than other 
.nations (and certainly no one doubts it), the conclusion is inevitable the 



DEPRESSION IN LABOR AND BUSINESS. 449 

outlays of our producers are greater than the outlays of rival pro- 
ducers, or we would exclude their products from our owu country and 
defy their competition in contending for supremacy in all the other mar- 
kets of the world. 

Notwithstanding our unquestioned ability to produce with less labor 
than other nations nearly every article consumed by humanity, we have, 
during the five years preceding the first day of July, 1878, when the 
wages of labor were lower than ever before in our country, and millions 
of men sought employment for a meager subsistence, purchased, im- 
ported, and consumed $1,198,159,970 in value of barley, oats, rye, wheat, 
pease, beans, potatoes, rice, flaxseed, flour, ale, beer, porter, wine, brandy, 
clothing, copper, lead, flax, hemp, salt, sugar, molasses, bituminous 
coal, manufactures of cotton, flax, silk, wool, glass, iron, and leather. 
The value of these articles, for each of the five years, was, in 1878, 
$198,269,487; in 1877, $206,965,360 ; in 1876, $226,019,175; in 1875, 
$263,388,573; in 1874, $303,517,375. 

They were indispensable to our comfortable existence. They could 
have been produced in our own country, with less labor than was re- 
quired in their production in those countries whence they were exported, 
and yet their purchase is conclusive evidence they were purchased with 
less money than would have been required to produce them in our own 
country. The Edgar Thomson Steel Works of Pittsburg are now im- 
porting 10,000 tons pig-iron from Great Britain. They pay an import 
duty of $7 per. ton, and not less than $10 per ton freight on it. More 
than one half the cost of the iron is for duty and freight, all paid by 
the producer in Great Britain, who no doubt makes a profit. With this 
bounty of $17 per ton in favor of the producer of pig-iron in Pittsburg, 
and with the ability to make a ton of pig-iron with less labor than is 
required in Great Britain, the producers of pig-iron in Western Penn- 
sylvania are unable to compete at home with those of Great Britain. 
How can the amazing anomaly involved in these facts be accounted for? 
Only on the hypothesis that the outlays of producers in the United 
States are greater than the outlays of rival producers. 

I will endeavor to demonstrate that has been and is now the case. 
An analysis of the cost of production is a preliminary necessity. 

The outlays of producers are the amouuts they pay for labor, for 
taxes to support their governments, and for interest on the capital in- 
vested and used in all their varied operations. 

The indispensable outlays of laboring men are the amounts they pay 
for the rent of houses to shelter themselves and their families, for 
clothing to cover their nakedness, and for food to replace the waste of 
nature. They cannot exist on less. Failure to get them is death. The 
price of rent is fixed by the outlays of owners of houses for taxes to 
support their governments, for repairs, and for interest on capital in- 
vested in land and houses. 

The amount which governments must collect from their citizens is 
fixed by their outlays for interest on their debts and for salaries to their 
officials and for any other needed outlays. 

The amount of the outlays of farmers, manufacturers, and owners of 
mines is regulated by the amounts paid for labor, for taxes, and for 
interest on the money invented in laud, farm-stock, implements, build- 
ings, machinery, and otherwise in their operations. 

It is obvious if the rate of interest in the United States was reduced 
from the average of 8 per cent, to the average rate of Great Britain and 
Europe, which is less than 3 per cent, per annum, the outlays of gov- 
ernments, owners of houses, farmers, manufacturers, and owners of 
H. Mis. 5 29 



450 DEPRESSION IN LABOR AND BUSINESS. 

mines for interest would be reduced about two-thirds, and the price of 
wages, rent, clothing-, food, and the rate of taxation, and all the ex- 
penses of living, and the cost of production would be reduced in the 
same ratio. It is thus made distinctly evident the rate of interest on 
money is the absolute arbiter of the cost of every commodity produced, 
and the higher rate paid in the United States than in rival producing 
countries is the sole cause of the depression in our productive industries, 
and the poverty and misery which have prevailed in this country the 
past six years. The truth of this proposition will be made still more 
manifest by the following elucidation : If the debts of our governments, 
corporations, and individuals amount to $15,000,000,000, and the aver- 
age rate of interest on them is 8 per cent, per annum, it requires 
$1,200,000,000 each year to discharge the interest. When to this item 
is added the compensation paid to the officials of our national, State, and 
municipal governments, our secular and religious teachers, our lawyers, 
and doctors, our railroad employes, our merchants, and other non-pro- 
ducers, amounting to at least $1,000,000,000 each year, we have the 
grand aggregate of $2,200,000,000 paid to the non-producers for the use 
of their capital and their services each year. The whole number of the 
non-producers of this nation, men, women, and children, is not over 
4,000,000. There is but one source whence this vast annual contribution 
of $2,200,000,000 to the non-producers can be derived. It must come 
from the producers of our country, and is therefore a tax upon produc- 
tion for the whole amount. If their products, in excess of what are re- 
quired to support themselves in existence, do not sell for a sura sufficient 
to meet the demands of the non-producers, the deficiency must be made 
out of their accumulations. That the products of the producers are in- 
adequate to meet the demands of the non-producers is evidenced by the 
rapid concentration of the property of the producers, into the hands of 
the non-producers by legal process. 

The rapidity with which this revolution is progressing is evidenced 
by the long lists of sheriff's sales in every judicial district of our country. 
The amazing spectacle is presented of 40,000,000 human beings, who pro- 
duce everything consumed by the nation, who furnish every dollar that 
is spent as well as every dollar that is accumulated by the nou producers, 
who put into office the officials who have enacted the laws and are now 
executing them by which the 4,000,000 non-producers are enabled to 
absorb all the 40,000,000 produce, and all they hav T e accumulated, sub- 
mitting to their financial immolation with apparent satisfaction. They 
possess the power to remedy the ills which are paralyzing them and 
could apply the remedy, in harmony with sound policy and justice, 
almost instantly. Whenever the outlays of the producers to the non- 
producers are reduced to an amount which can be paid out of their 
products and leave in their hands an amount which will afford them a 
compensation for the capital they employ equal to the compensation 
realized by the non-producers on their capital and for their services, the 
producers will be as prosperous as the non-producers. It is manifest, 
from the facts I have presented, the panic in 1873 and the "depression of 
the financial and business affairs of our country " which followed were 
the inevitable sequents of the high rate of interest which our govern- 
ments, our corporations, and our people had agreed to pay on the money 
borrowed to increase our means of producing those things consumed by 
humanity, the inability of our producers to sell their products for a sum 
sufficient to pay the interest, and the depreciation in the value of property 
which could not be utilized in productions without loss. I have thus 
answered your first question. 



DEPRESSION IN LABOR AND BUSINESS. 451 

When the farmers and the operators of the manufactories and 
mines of our couutry realized their inability to obtain for their prod- 
ucts a sum sufficient to meet their outlays, they at once reduced 
the wages of labor, for the reason that was the only item in their 
outlays which they could at once diminish. They were the only employ- 
ers of labor in the land — they contributed everything the laborers con- 
sumed, as well as everything they accumulated ; without their aid star- 
vation was the lot of the millions who labored for them ; goaded by 
empty stomachs, the pitiless storms, and tattered garments, the labor- 
ing people wisely yielded to necessity, and accepted the wages offered 
to them. The remaining outlays of the producers, interest and taxes, 
are undiminished. They cannot be diminished without a radical change 
in our laws. The resistless power of money has, thus far, baffled every 
attempt to equalize the compensation of the money lenders and govern- 
ment officials with that of the farmers, the manufacturers, the operators 
of mines, and the millions who labor for them. While the money lend- 
ers realize an average of 8 per cent, per annum for the $15,000,000,000 
they have invested in the debts of our governments, our corporations, 
and individuals, our farmers and the owners of our mines and manufac- 
tories get no compensation for a much greater number of billions in- 
vested in farms, farm-stock, implements, machinery, buildings, and 
mining operations. While the officials of our national, State, and munic- 
ipal governments and other non-producers get a compensation for their 
services as great as during the period of our greatest prosperity, the 
toiling millions of our country are either sweltering in poverty or living 
on a scanty allowance. Until the outlays of the producers for interest 
and taxes are reduced, so that they can realize out of their products an 
amount sufficient to secure them a compensation for their capital equal 
to that realized by the money-lenders, they will be unable to remuner- 
ate laborers any more liberally than they do. I have thus answered 
your second question. • 

There is but one remedy for the financial ills which have so long para- 
lyzed our productive industries and oppressed the laborers of our coun- 
try : reduce the rate of interest in the United States to the standard of 
rival producing countries, and the salaries of all officials in the same 
proportion. So long as the farmers, the operators of our miues and 
the manufactories, and the millions who labor for them, the producers 
of our country, are compelled to pay an average of 8 per cent, interest 
on the debts for which they are liable, while the producers of Great 
Britain aud Europe, our rivals in nearly every product of our soil, our 
mines, aud our manufactories, pay an average of not over 3 per cent, 
interest on their debts, and while the minimum amount of the debts on 
which our producers pay interest exceeds $15,000,000,000, and the max- 
imum amount of the debts upon which the producers of Great Britain 
or any of the governments of Europe pay interest is less than $15,000,- 
000,000 making the outlays of our producers, for interest alone, at least 
$750,000,000 more each year than the outlays of the producers of any 
other government, our producers will swelter in poverty, and we will 
continue to import many of those things essential to our existence, at a 
less cost than we can produce them for, notwithstanding we can produce 
them with less labor, and if the outlays of the producers were fairly 
equalized we would produce them at less cost. 

These facts make it plain the preliminary step on the road to pros- 
perity is a reduction in the rate of interest in this couutry to the stand- 
ard of rival producing countries, which would be speedily followed by 
the production in our country of nearly everything we consume, as well 



452 DEPRESSION IN LABOR AND BUSINESS. 

as nearly everything consumed by other nations, at prices so low as to 
enable oor producers to contend with profit to themselves for supremacy 
in all the markets of the world, for every product of our soil, our mines, 
and our manufactories. 

How can the rate of interest be adequately reduced? To answer 
this question properly it is necessary to ascertain what fixes the rate of 
interest on money. The rate of interest is regulated by the relation of 
the supply of money to the demand for it. Whenever the demand for 
money exceeds the supply, the rate of interest rules high. Whenever 
the supply of money is greater than the demand for it, the rate of in- 
terest rules low. All efforts to control the rate of interest by legal en- 
actment have been failures. In this State the law limits the rate of in- 
terest to 6 per cent, per annum, and imposes penalties designed to re- 
strain lenders from accepting any higher rate, yet money-lenders of 
every description, bankers as w?ll as private lenders, constantly and 
openly violate this law, and accept any rate they can get. Our national 
banks now charge as much as 9 per cent., and private bankers and lend- 
ers much higher rates. The almost universal disregard of the law 
limiting the rate of interest, tells us distinctly there must be some other 
and more potent restraint than prohibitory laws devised to keep 
money-lenders within proper bounds. The only true criterion of the 
proper rate for interest on money loaned is the relation between the 
compensation for money loaned and for money employed in production. 
Whenever the compensation for money loaned is greater than the com- 
pensation for money employed in production, it is obvious the supply 
of money is unequal to the demand for it and the rate of interest is too 
high. The owners of property at such times are unable to sell it, for 
the reason property which yields an income less than the income for 
money loaned is valuable only in that proportion, and the longer this 
disparity in the compensation of money-lenders and producers contin- 
ues, the greater will become the depression in the value of the property 
of producers, and the only escape from the final immolation of produc- 
tion will be a just equalization in the compensations of money-lenders 
and producers. Production has for many years been in a ruinous state 
of depression, while the business of lending money has been in the 
highest degree remunerative in this country. Our Federal Govern- 
ment has the power to remedy this evil speedily. It possesses the right 
to collect from the people the amount needed to meet its outlays, and 
the concurrent right to issue paper money sufficient to do so. 

During rhe last year the Federal Government collected from the pro- 
d icers of the United States about $265,000,000, to pay the interest on 
its debts and the salaries of its officials. If the government had exer- 
cised its unquestioned right, and issued paper money sufficient to pay 
these debts it is obvious the producers would have retained the amount 
in their hands, and been enriched the whole amount, and the money- 
lenders would have a like increase in the amount of money to loan, and 
with that addition to the volume of money in circulation, it is evident 
the power of the money-lenders to exact maximum rates of interest 
would to some extent be curtailed, and if the same operation was con- 
tinued long enough, a just mean in the compensation for money em- 
ployed in production and for money loaned would be inevitable. When 
that end would be attained sound policy would dictate a cessation in the 
issue of money, and a restoration of the collection of taxes to meet the 
outlays of the government, which would arrest the reduction in the rate 
of interest. There is no way by which that equilibrium, in thecompen 
sationsfor the capital employed by money-lenders and producers, essen- 



DEPRESSION IN LABOR AND BUSINESS. 453 

tial to maintain oar producers iu permanent prosperity, can be estab- 
lished and perpetuated except by our Federal Government exercising 
wisely the power it possesses to furnish the people sufficient money to 
transact their business, and the only unerring index of the proper 
amount of money in circulation is when the rate of interest on money 
loaned and the compensation for money employed in production are 
fairly equalized. The material used in the fabrication of money wields 
no. influence in accomplishing this result. Experience and the light of 
reason tell us paper money is as good as coin money in settling the bal- 
ances which arise amoug men iu their business transactions. The only 
mission and duty of money is to settle or pay these balances. The assump- 
tion that money made out of gold and silver has a permanent intrinsic 
value equal to its value as money, and is therefore preferable to paper 
money, is entirely fallacious. The ultimate value of coin money is as 
uncertain as the ultimate value of paper mouey. Whatever value gold 
aud silver possesses is the result of the demaud for them in the fabrica- 
tion of money and ornaments. If the demand for them for making 
money should cease, or be materially curtailed, or if the production 
should be largely increased, their value would be reduced and they might 
become worthless. The ultimate value of either coin or paper mouey 
can be made absolutely certaiu only by the government receiving it in 
payment of taxes, and when received destroy it. Why should gold and 
silver be issued for making money 1 ? The producers contribute the 
whole amount expended by our Federal Government in the purchase of 
the bullion and its manufacture into money. To do so involves an out- 
lay at least one hundred times greater thau would be acquired to make 
the same amount of paper money, and when made it is rarely used, ex- 
cept to settle the balances in favor of the producers of foreign couutries, 
to whom it is shipped generally as soon as coined. 

During the fiscal year 1878 our Federal Government coined $81,120,- 
499.50 gold and silver mouey, aud as soon as it left the Treasury it com- 
menced its journey to foreign lands, which is proven by the fact that 
the exports of coin money and bullion that* year exceeded our imports 
of coin and bullion $3,918,811. Every dollar of this was furnished by 
the producers of our country, and was a tax upon production for the 
whole amouut, nearly all of which would have been saved if the gov- 
ernment had made and issued the same amount of paper mouey in place 
of coin money. During the year 1878 our Federal Government issued and 
sold her bonds, bearing interest, for an amouut sufficient to accumulate 
$141,888,100 gold and silver money, for the purpose of resuming specie 
payments on the 1st of January, 1879. In place of using that large ac- 
cumulation of mouey for the purpose for which it was borrowed, it has 
been lying unemployed in the vaults of the government treasuries, and 
the greenbacks (it was borrowed to replace) and national-bank notes 
are performing the duties of the idle coin money with more satisfaction 
to all the people than coin mouey. 

The outlay of the Federal Government for interest on the bonds sold 
to get this idle coin money, and the expense of constructing the vaults 
requisite to store it, the wages of the armv of men engaged in guarding 
it from the assaults of the hungry millions of our couutry, the salaries 
of the officials and clerks employed to manage the transaction and to 
record, in proper books, the history of the operation, amounts to many 
million dollars, all of whicli is paid by the oppressed producers of our 
couutry. Our Federal Government has reserved, from its birth, with 
jealous selfishness, the right to make aud issue coin money, and dele- 
gated to individuals, aggregated into corporations called banks, the 






454 DEPRESSION IN LABOR AND BUSINESS. 

right during most of the time to make and issue paper money. The 
expense of making and issuing the paper money and all the profit which 
resulted from it has always been paid by the producers. The magni- 
tude of this contribution is apparent from the dividends declared by 
our national banks for many years, amounting to an average of at least 
10 per cent, each year upon a capital stock of not less, on the average, 
than $400,000,000, and the amount the banks pay their officers and 
clerks for services, not less than the sum distributed in dividends. . Is 
it honest, is it wise in the managers of our Federal government to dele- 
gate to individuals the opportunity to realize a profit of $80,000,000 
each year for dividends and services for the privilege of furnishing the 
people with $400,000,000 national-bank notes, to enable the people to 
settle the balances which arise between them in their business transac- 
tions ? It would not cost the government the one-hundredth part of that 
amount to furnish for years $400,000,000 paper money, having the nation 
as sponsors for its ultimate value. I have made it plain, the producers 
of the United States have contributed during the last year $81,120,499.50 
to enable the Federal Government to coin and issue that amount of 
gold and silver money, which was at once handed over to the money- 
lenders of other countries to pay the interest we owe them, at least 
$15,000,000; to enable the government to pay the interest on bonds 
issued to buy the gold and silver money necessary to commence specie 
payments, which, in place of being thus used, lies idly in the vaults 
of the government, the salaries of officials, clerks, and guardsmen to 
watch it, and $80,000,000 to the owuers and managers of our national 
banks for dividends and salaries. These large amounts, aggregating 
$176,120,499.50, were contributed by the producers of our country to 
our Federal Government and our national banks, during the last year, 
to provide the people with money to settle the balances which arose 
between them in their business operations. It was a tax upon produc- 
tion for the whole amount. The only persons benefited by the contri- 
bution were the money-lenders of foreign countries, who received the 
$81,120,499.50 gold and stiver money coined, the officials, clerks, and 
guardsmen employed in the steel-clad treasuries, and the money-lenders 
from whom the contents of the treasury were borrowed, and the owners 
and managers of our national banks, while our paralyzed producers 
sweltered in poverty to meet these and the other demands of the non pro- 
ducers. It could all have been saved by the government issuing paper 
money in place of buying gold and silver bullion and coining it into 
money for the benefit of foreign money-lenders, by not borrowing gold 
and silver money to keep it unemployed in steel-clad fortresses, such 
as our Federal Government has constructed and is now using in the 
city of New York, and by replacing the national bank notes with na- 
tional paper money. These facts cannot be questioned ; they are part of 
the history of our country, glaringly manifest, indelibly impressed upou 
the record. They are justified by elaborate arguments uttered by a por- 
tion of the managers of our government and claimed by them to be the 
architects of the recent enhancement in the price of some of the pro- 
ducts of our producers. It is boldly asserted by them gold and silver 
money is the only honest money, and that our people can become pros- 
perous and happy by using coin money alone in the settlement of the 
balances which arise in -their business transaction. 

If what I have said does not demonstrate the fallacy of these opin- 
ions and the wicked folly of perpetuating the past and existing financial 
policy of our government, the following elucidation, in connection with 
the foregoing,- will, I hope, have the effect to do so, and inaugurate a 



DEPRESSION IN LABOR AND BUSINESS. 455 

policy which will result in securing to the 10,000,000 producers the 
blessings of prosperity equally with the 4,000,000 non-producers. 

A nation acquires wealth only when the people produce, in excess of 
all their outlays, those things which constitute wealth, or which can be 
exchanged with other nations for wealth. The people of the United 
States possess the means to produce everything cousumed by humanity 
with a less outlay of physical effort than any other nation. This pre- 
eminence in our ability to produce arises from the extent of our terri- 
tory, the fertility of its soil, the variety and geniality of its climate, 
the exhaustless supplies beneath the surface of minerals and metals un- 
equaled in quantity, quality, or accessibility; our unequal facilities for 
trausport furnished by our rivers, lakes, canals, railroads, and roadways, 
penetrating every portion of our vast territory, and the unsurpassed 
manufacturing establishments in existence, and the ingenuity, skill, and 
energy to increase them to any extent. With wise laws, properly ad- 
ministered, we could produce everything we consume, and defy all com- 
petition in contending for supremacy in the markets of the world for 
nearly every article consumed by humanity. The kind of money used 
to settle the balances incident to productiou does not affect the cost and 
the amount of production, while the rate of interest is the sole arbiter 
of the cost, and the cost is the arbiter of our ability to sell, and the cost 
r.nd amount of production are the meters of our increase in wealth. If 
the rate of interest is the arbiter of the cost of production ; if the rate 
of interest is fixed by the volume of money in circulation in proportion 
to the amount of debts to be paid; if the unerring index of the proper 
rate of interest on money is the compensation or profit realized upon 
the capital employed in production ; if production is the only source of 
wealth ; if the producers of our country, numbering not less than 
40,000,000, men, women, and children, realize no compensation for the 
money employed in all their varied operations, and the wages of labor 
are not sufficient to supply the indispensable wants of humanity, while 
the money-lenders, government officials, and other non-producers, num- 
bering not over 4,000,000 human beings, realize a maximum compensa- 
tion for their money and their services amounting each year to at least 
$2,200,000,000, the obvious duty of our Federal Government is to enact 
laws requiring the payment of its debts in paper money, made a legal 
tender, and reducing the salaries of its officials in proportion to the re- 
duction which has occurred the last six years in the value of the property 
and the wages of the labor of the 40,000,000 producers. To appreciate the 
results which would flow from the adoption of the financial policy which 
1 have proposed it is necessary to summarize some of the products of 
the world, and our ability to produce them, and the commercial transac- 
tions of our own with other nations. 

The nations of the world now consume annually about 8,00 f> ,000 bales 
of cotton. Of this amount the farmers of the United States produced 
last year 4,600,000 bales, and the crop of this year is estimated at 
5,000,000 bales. We have in the States lying in the Mississippi Valley 
enough vacant land especially adapted to the growth of cotton by its 
fertility of soil and location capable of producing more cotton than the 
world consumes. Despite the vast unjust and unnecessary outlays to 
which our producers have been, and are now, subject, they have defied 
the competition of the producers of other nations in selling their cotton ; 
and if their outlays were reduced as I have proposed, the poorly-paid 
laborers of our own and other countries would speedily utilize our unoc- 
cupied lands in producing cotton sufficient to supply all the wants of 
mankind. 



456 DEPRESSION IN LABOR AND BUSINESS. 

The world consumes each year about 8,000,000 tons iron. Of this 
amount Great Britain manufactured in 1867 (the last year I have any 
account of the amount produced), 4,761,023^ tons. The product of the 
United States has never in any year reached 3,000,000 tons, notwith- 
standing we have the blast-furnaces and rolling-mills in existence, 
and the skill and labor to utilize them, capable of producing 5,000,000 
tons annually. With almost a continent of land capable of producing 
with minimum labor everything necessary to support men in comforta- 
ble existence ; with, iron ore, stone coal, and limestone greatly superior 
in quantity, quality, and accessibility to those of Great Britain and 
the balance of the world ; with ingenuity, skill, and industry unsur- 
passed ; with all these advantages, our iron-works, until lately, have 
been idle or unprofitably employed, the owners and operatives have been 
struggling in financial embarrassment and sweltering in poverty, and 
during the five years preceding the 1st day of July, 1878, we purchased, 
imported, and consumed $83,591,149 in value of iron and steel. These 
facts tell us distinctly whenever the supply of money is so increased as 
to reduce the rate of interest in this country to the rate paid by the 
producers of iron in Great Britain, we will produce not only all the 
iron and steel we consume, but will be able to sed at prices, with 
profit, which will enable our manufacturers to exclude those of Great 
Britain from all the markets of the world. 

In 1867 the people of Great Britain manufactured $198,410,150 in 
value of cotton goods, and exported and sold that year $354,228,560 
in value of them. 

From the insignificant beginning of less than $1,000,000 in value in 
1760, the manufacture of cotton goods in Great Britain swelled to 
$150,000,000 in 1824, and in the following forty-three years increased so 
rapidly as to reach the vast sum of $498,410,150 in 1867. Every pound of 
the cotton consumed in the fabrication of these goods, and much of the' food 
consumed by the operatives during that long period of one hundred 
and seven years, were purchased and imported from other nations, 
largely from the United States. With the ability to produce the raw 
cotton and the food needed to sustain the operatives, with less labor 
than other nations ; with machinery in existence unsurpassed in ex- 
cellence, and with the skill to use it successfully and the ingenuity to 
increase it to any extent, to enable us to produce in excess of our 
own wants, why did we go, during the five years preceding the 1st day of 
July, 1878, to other countries, purchase, import, and consume $116,451,597 
in value of cotton fabrics. During that period the wages of operatives 
in this country were at minimum, the price of raw cotton was less than 
in Great Britain and elsewhere, and yet nearly all the owners of cotton- 
mills in the United States were involved in financial ruin. These anom- 
alies are all explained by the fact that our manufacturers were com- 
pelled to contribute, in obedience to the mandates of existing laws, 
nearly three times as much to the money-lenders for interest as the 
manufacturers of other nations were subject to, and were unable to 
realize out of their products and their accumulations a sum sufficient to 
meetthe demands of the non-producers. The people of England, Scotland, 
Ireland, Wales, and the Channel Islands, having a territory of 5,000 square 
miles less than the States of Xew York, Ohio, and Pennsylvania, owned 
and fed 35,617,812 sheep on' that territory in 1867, and manufactured and 
sold to other nations the same year $125,887,188 in value of wool and 
woolen goods. In 1870 the sheep in the United States numbered 
28,477,951, and we imported and consumed that year over $60,000,000 
in value of wool and woolen goods. 



DEPRESSION IN LABOR AND BUSINESS. 457 

During the last five years we imported and consumed 6217,353,007 
in value of wool and woolen goods, viz: in 1874, $55,032,494; in 
1875, 655,680,843; in 1876, $11,457,425; in 1877, $32,589,666; in 
1878, 833,592,569. With almost a continent of land, most of it uncul- 
tivated, covered with native grasses especially adapted to the nutrition 
of sheep without other food, capable of supporting in the most healthy 
and vigorous condition hundreds of millions sheep with no cost save 
the herding, it is marvelously strange we should have gone to other lands 
to buy the clothing necessary to protect us from the chill winds of win- 
ter as well as the lighter garments to cover our uakeduess during the 
genial months of summer. TVith woolen mills in our country having 
the capacity to make all the woolen goods needed to supply our owu 
wants, with operatives skilled in their use, goaded by pinching want, 
vainly asking for a chance to supply their indispensable wants by honest 
toil, we gave to the producers of other countries that which of right 
belonged to our producers in consequence of the unjust contributions 
which they were forced by existiug laws to make to money-lenders for 
interest and government officials for salaries. 

During the last live years we imported and consumed 8412,400,696 in 
value of sugar and "molasses, viz: in 1874, 892,849,203: in 1875, 
$85,032,504: in 1876, $66,296,553: in 1877, $90,677,969; in 1878, 
$79,554,467. AVe have millions of acres of land in our Gulf States, the 
home of the sugar-cane, in their primitive fertility, inviting the indus- 
try and skill of all nations to utilize them in the production of these 
indispensable luxuries. In that region we could produce all the sugar 
and molasses required to supply oftr own wants with no greater ex- 
penditure of labor than is necessary in any other locality. The sugar- 
cane is not the only source whence we could derive our needed supply 
of sugar and molasses. Nearly every acre of land in the United States, 
suited to tillage, will produce the sugar-beet with as little labor as is 
required elsewhere. It has been demonstrated by the practice of the 
people of France and Prussia that the sugar-beet is as economical a 
source whence sugar and molasses can be derived as the sugar cane. 
The people of France have relied upon the sugar-beet for their supply 
of sugar and molasses siuce its introduction by Napoleon Bonaparte. 
In 1838 the people of Prussia made only 7,676 tons beet sugar, and in 
the succeeding twenty-nine years increased the production of it so 
greatly that in 1867 it amounted to 201,241 tons. After the sacchariue 
matter has been extracted from beets, the residuum is among the most 
valuable articles devoted to animal nutrition, and thereby to the in- 
creased fertility of our laud. The following facts establish the truth 
of this position : 

Iu the district of Valenciennes. Frauce, prior to the introduction of beet-root culture, 
the production of wheat was 975.000 bushels and the number of oxen TOO. After its 
successful introduction, the production of wheat was 1.16S, 000 bushels and the number 
of oxen was 11,500. 

When to the cotton, wood, and iron I have enumerated are added the 
almost numberless articles of which they are the component, and the 
other countless commodities consumed and used by mankind, which we 
possess the means of producing with less or no greater outlay of physi- 
cal effort than other nations, our unequaled opportunity for the accu- 
mulation of wealth is manifest, whenever the outlays of our producers 
to the non-producers are as low as in rival producing countries. The 
evil effects of maintaining the outlays of our producers at maximum are 
made additionally evident by the following facts: During the eighteen 
years preceding July 1, 1878, the value of the merchandise imported 



458 DEI SESSION IN LABOR AND BUSINESS. 

and consumed was $7,619,310,721, and exceeded the value of all onr 
exports, except gold and silver, $698,389,752. During the same period 
our exports of gold and silver exceeded our imports of those metals 
$905,027,976, and the vast debts resting upon us, amounting to at least 
$15,000,000,000, and possibly twice that amount, were created. It is 
probable more than one-half of all onr debts are owned by the money- 
lenders of other nations, and to pay the interest on that portion of our 
debts requires the contribution of at least $600,000,000 each year in 
coin money from our producers, or, if unpaid, an addition of the defi- 
ciency to our debts. There is no public record kept of this item in the 
outlays of our producers. It is obvious, therefore, unless the value of 
our commodities exported and sold exceeds the value of commodities 
imported and consumed $600,000,000 each year our debts to foreigners 
would be increased. 

Notwithstanding the balance in our favor in the exchange of com- 
modities with foreign nations the last two years was $522,450,836, we 
exported $8,622,452 more gold and silver than we imported, which is 
conclusive evidence the whole of the $522,450,836, as well as the 
$8,622,452, were absorbed in the payment of interest on our debts, and 
it does not necessarily follow tbese amounts discharged all the interest 
which accrued on our debts. The unusual influx of gold and silver into 
this country since the close of the last fiscal year was caused by the 
failure of the wheat crop in Great Britain and Europe, a;id the fact 
that our farmers alone were able to supply the deficiency ; and if we 
should be able to retain any portion of the gold and silver received this 
year for our surplus wheat, it will be the first time out of the last twenty 
years we have added to the wealth of the nation by the sale of our sur- 
plus products. While it is evident the price of the products of our 
mines and our manufactories and the wages of the labor devoted to 
their operatiou has advanced, and their owners are probably realizing 
at this time for their products a sum sufficient to meet all their outlays, 
and possibly leave them a surplus, it is equally evident this increase in 
the receipts of the owners of our mines and manufactories and their co- 
workers, amounting to hundreds of millions dollars in the year, is all 
paid by the remaining producers of our country, the farmers and their 
co-laborers. Our sales of iron and cotton and woolen goods to foreign 
countries will be no greater than formerly; on the contrary, they will 
likely be diminished, and the quantity of them imported and consumed 
will be increased. The importation of the 10,000 tons of pig-iron from 
Great Britain by the Edgar Thomson Steel Works of Pittsburgh, 
already noted in this paper, is not an exceptional case of the kind, 
and may be regarded as conclusive evidence that the boom of pros- 
perity for the producers of iron will be short-lived, and will be succeeded 
by a revulsion as disastrous as that of 1873. Permanent, enduring 
national prosperity can be secured only by the production and sale of 
commodities to foreign countries in excess of all our outlays. The pro- 
duction and sale of iron, cotton, and woolen goods at an advance in 
price to our own people may enrich their producers, but it is done at 
the cost of the remaining producers, the farmers, and unless they get a 
corresponding advance in the prices of all their products, it is evident 
their net income will be reduced just in proportion to the increase in 
the income of the remaining producers. Our farmers have realized a 
small advance in the price of their wheat, and have sold more of it 
than usual to the consumers of other lands, not enough to meet 
the additional demands made upon them in consequence of the 
enhanced value of the products of our mines and manufactures. 



DEPRESSION IN LABOR AND BUSINESS. 459 

The inevitable conclusion from these facts is that the present boom of 
prosperity is delusive and will end in another revulsion. The debts 
of our governments, our corporations and individuals, and the an- 
nual accruing interest on them are undiminished; the salaries of the 
officials of our national, State, and municipal governments have not 
been reduced; the compensation to secular and religious teachers, law- 
yers, doctors, merchants, railroad employes, and other non-producers 
is no less than in past years. These constitute the outlays of our pro- 
ducers, and are the cause of their financial paralysis. They fix the 
cost of all their products, and the cost is so much more than the cost 
of similar products in other lands, in consequence of the higher rate of 
interest in this country, we can buy cheaper than we can produce, not- 
withstanding we can produce with less labor than the people of other 
countries nearly every article consumed by humauity. 

The history of the rise and progress of manufacturing industry in 
Great Britain is full of instruction and encouragement to the people of 
our country. The production of cotton fabrics in Great Britain in- 
creased from less than $1,000,000 in value in 1760, to 8498,410,150 in 
1867. The production of iron increased from 400,000 tons in the year 
1820 to 4,761, 023£ tons in 1867. During the fifty-nine years commenc- 
ing with 1798 and ending with 1857, the people of Great Britain ex- 
ported and sold 811,397,650,385 in value of commodities in excess of 
the value of all their imports. From that time until 1873 was the period 
of the greatest prosperity enjoyed by the manufacturers of Great Brit- 
ain, and it is probable the accumulated wealth of the people was in- 
creased from 811,397,650,385 in 1857 to, at least, 825,000,000,000 in 
1873. During that period, our imports of merchandise exceeded our 
exports of merchandise over $1,000,000,000; our exports of gold and 
silver exceeded our imports of gold and silver $905,027,976, and the 
present debts of our governments, corporations, and individuals, 
amounting to at least 815,000,000,000, and possibly twice that amount, 
were created. Great Britain has become the great creditor nation of 
the world by keeping the* supply of mouey at maximum, the rate of 
interest and the outlays of her producers at minimum, and thereby en- 
abling her people to contend successfully for supremacy, in all the mar- 
kets of the world, for the surplus products of her mines and manufac- 
tories. 

By steady persistence in that policy her capitalists have become the 
largest lenders of money of any nation in existence. They are the 
largest owners of the debts of our Federal, State, and municipal gov- 
ernments, our corporations and individuals. The amount realized annu- 
ally for interest by her capitalists, from their debtors in this and other 
nations, is no doubt sufficient to support in comfort all the people of 
Great Britain. 

The United States is the great debtor nation of the world, and by 
adopting the policy of keeping the supply of money at minimum, by 
using the most costly materials, gold and silver, for money, the rate 
of iuterest and the outlay of her producers are kept at maximum, aud 
the amazing spectacle is presented of a nation buying at less cost those 
things essential to the existence of our people, which they can produce 
with less labor than the people from whom we buy them, as the inevi- 
table sequence of that policy. The supply of coin money in this country 
can be increased only by producing commodities in excess of our own 
wants which can be exchanged for coin money. A reduction in the 
outlays of our producers to the standard of rival producers is a prelimi- 
nary necessity. 






460 DEPRESSION IN LABOR AND BUSINESS. 

Production being the only source of wealth, it follows the amount 
and cost of production are the meters of the increase in wealth. I have 
demonstrated the people of this country possess the means to produce 
nearly everything consumed by humanity with less labor than the peo- 
ple of other countries, that the rate of interest on money is the abso- 
lute arbiter of the cost of every commodity produced, that the rate of 
interest in this country is nearly three times greater than in rival pro- 
ducing countries, that the rate of interest is regulated by the relation of 
the supply of money to the demand for it, that the only mission and 
duty of money is to settle the balances which arise among men in their 
business transactions, that paper money does this as well as coin money, 
that the ultimate value of coin money is no more certain than the 
ultimate value of paper-money, that money of any kind can be made 
absolutely good only by the government redeeming and destroying it, 
that the only true index of the adequacy or inadequacy of the supply 
of money is the relation between the compensation for money loaned 
and the compensation for money employed in production, that the pro- 
ducers of the United States have not for many years realized any com- 
pensation for the capital employed in their operations while the money 
lenders have realized a maximum rate of interest on their capital, that 
the entire cost of making money, and all the interest realized from money 
loaned, is contributed by the producers of our country and is a tax upon 
production for the whole amount. The conclusion is inevitable, sound 
policy and justice demand that our Federal Government ceases to collect 
from the producers of our country the money required to pay its debts, 
and issue paper money to do so, until the compensation for the capital 
of money-lenders and producers is fairly equalized. When that end is 
attained it is obvious the government should cease to issue money, and 
resume the collection of the needed amount to pay its debts from the 
producers. With national bonds amounting to about $1,900,000,000, 
the annual accruing interest on which is about $108,000,000, and with 
annually recurring debts for interest and salaries amounting to abou 
$27^,000,000 — all paid by the paralyzed producers of our country — the 
opportunity to afford instant financial relief to our producers by the pay- 
ment of all or any portion of existing debts with an issue of paper money 
is apparent. 

The plan I have proposed involves the destruction of all our national- 
bank notes, and the exercise by the Federal Government alone of the 
right to furnish the people with money to transact their business. It is 
evident by the wise exercise by the managers of our Federal Govern- 
ment of the unquestioned right to collect from the people the amount 
needed to pay its debts, or the concurrent right to issue paper money 
and pay them, a perfect equilibrium in the compensation for the capital 
of producers and money-lenders can be established and maintained, and 
the financial disasters which have been so destructive to human hopes 
and human happiness can be, to a great extent, avoided. 

The remedy for existing financial ills is the immediate payment of 
our national bonds with national paper money, to be a legal tender, 
and a reduction in the salaries of all government officials, in proportion 
to the diminution which has occurred the past six years, in the 
value of the property and the wages of the labor of the 40,000,000 
producers of our country. The first and almost immediate effect of the 
conversion of our national bonds into money would be a reduction in 
the following outlays of our producers : The cost of making all our coin 
money ; the cost of keeping this coin money idle in the vaults of our 
the cost of furnishing the natioual-bank notes and the inter- 



DEPRESSION IN LABOR AND BUSINESS. 461 

est on our national bonds. These outlays aggregated last year, as I 
have demonstrated, $281,120,499.50. These would be speedily followed 
by a reduction in the rate of interest on all our debts so great as to 
enable our producers to secure for their capital a compensation equal 
to the compensation realized by money-lenders for their capital when 
loaned. The minimum amount of the reduction in this item in the 
outlays of our producers would, in all probability, reach $600,000,000 
each year. When to these is added the reduction in the compensation of 
the officials of our governments and other non-producers, which would 
equitably and inevitably follow, it is obvious the aggregate diminu- 
tion in the contributions of the 40,000,000 producers to the 4,000,000 
non-producers would exceed $1,200,000,000 each year. With this vast 
annual diminution in the cost of the products of our soil, our mines, 
and our manufactories, it is evident our producers could defy the 
competition of the producers of all other countries in contending for 
supremacy in the markets of the world for the surplus products of our 
labor, our ingenuity, and skill. With the ability to produce nearly every 
article consumed by humanity, with less labor than other nations, it is 
evident, when the outlays of our producers are reduced to miuimum, the 
profits which will result to producers will stimulate production to maxi- 
mum, and our exports will exceed our imports so largely as to speedily 
change our condition from the great debtor nation of the ivorld to the 
great creditor nation of the world. Then, and not till then, will the hopes 
of the advocates of hard money be realized. Then will gold flow into 
our couutry, and remain with us until we find something more valuable 
than gold to exchange it for. I have thus answered your third and fifth 
questions. 

The only just basis for taxation is income. Income is not limited to 
the profits arising from loans, salaries, and business operations, and from 
rents, but applies equally to investments in what is termed unproductive 
property. The motive which prompts such investments is the ultimate 
increase in the value of such property, and unless the ultimate increase 
in the value of such property would equal or exceed the amount which 
could have been realized by using the same amount in loans, or in some 
business adventure, the result would be unsatisfactory, and the invest- 
ment would not be made. ^The only unerring meter of the value of 
property is the profit which results to the owner from it, not for 
one year alone, but for a series of years. If property fails to yield 
an income equal to the 'income which is afforded by investing a 
like amount of money iu loans, or in any business operation, it will 
recede in value until it reaches a price in proportion to the income, 
modified by its prospective value. As governments are created for the 
common good and the general welfare, each individual should contribute 
towards the expense of maintaining the government in proportion to the 
benefits which he derives from the government. Income is the measure 
of the equity and perfection with which governments are managed. 
Whenever one class prospers unduly and another class is iuvolved 
in adversity, it is clearly evident the laws in existence are unjust and 
unwise, or they are unjustly and unwisely administered. The whole 
duty of government is to secure equal justice to all men, and so manage 
its affairs, if there must be any discrimination, that the greatest good 
will be conferred on the greatest number. The crowning evidence 
of the unjust and unwise laws in existence in the United States 
is the fact that the 40,000,000 human beings employed in and de- 
pendent upon farming, manufacturing, and mining operations have 
for six years sweltered in absolute poverty in consequence of the de- 






462 DEPRESSION IN LABOR AND BUSINESS. 

mands made'upou them by the 4,000,000 men, women, and children 'who 
produce nothing, who receive every dollar they spend and every dollar 
they accumulate from the paralyzed producers, and which I have dem- 
onstrated amounts to at least $2,200,000,000 each year. 

History presents no anomaly equal to this— 40,000,000 human beings, 
who make and unmake our laws, being immolated by 4,000,000. Lib- 
erty, justice, and reason are almost hopeless. 

I have in the foregoing endeavored to give the cause of the hard 
times which have so long prevailed in this country and the remedy for 
them. If the facts and the principles are unquestioned, the conclusions 
are their inevitable sequents. If what I have said should result in 
prompting the managers of our governments to make needed reforms, 
my reward will be complete. 
Kespectfully, 

GEO. EHEY. 



To Hon. Hendrick B. Wright, 

Chairman Committee House of Representatives. 

on the Depression of Labor : 

Sir : In responding to the request for my views of the matters spec- 
ially belonging to the purview of your committee's investigations, I can 
but briefly indicate some of the most salient causes of the great " world's 
crisis" in which the nations of Western Europe in common with our- 
selves are now plunged by the spirit of the times. 

That our case is not singular is conceded, and that our boundless re- 
sources of soil and climate have more than anything else sustained us 
in the throes of the present crisis is not to be doubted. Neither our 
form of government nor the wisdom or unwisdom of our legislators, 
judges, and executive officers have had more than a minor share in pro- 
ducing the condition of affairs now upon us. 

No form of government can be exempt from influences which are so 
fundamental as those which now press upon our whole civilization with 
a resistless power, to modify the very groundwork of our traditioual 
institutions and social conditions; nor can the statu quo of our political 
institutions be maintained in the revolution that for nearly a century 
lias characterized the transition of the older into the newer forms of in- 
dustrial and political life. 

Legislation, while it may delay, cannot frustrate, the spirit of the age; 
and only so far as legislation truly reflects the deeper moral convictions 
of the people can it aid us in the present crisis. From the decay of mili- 
tary and feudal civilization arose the revolutionary epoch which has 
already brought modern civilization to the recognition of the rights of 
man as an individual, and this principle has thus far found its highest 
expression in our own country in the enfranchisement of all laborers. 

But the rights of man as a social being, and as the heir of all the 
parts, have, with the duties which belong to the exercise of those rights, 
remained vague and unformulated, both from inadequate and improper 
moral direction, and from the influences of our natural conservatism or 
social inertia, which have hitherto furnished no adequate basis for the 
social and industrial regeneration already demanded by the altered con- 
ditions of the proletarian masses. 

In recognizing the central fact that our modern civilization has 
emerged from the military and feudal forms into the more enduring 
and progressive type of industrial civilization, \our committee and the 



DEPRESSION IN LABOR AND BUSINESS. 463 

Congress of which it is a part, can, by the co-operation of State legisla- 
tures and constitutions, forward the orderly progress of such inevitable 
changes in our political institutions as will adapt them to the require- 
ments of modern society. 

No national efforts here or elsewhere have as yet consciously and in- 
telligently undertaken the task of directing the mighty changes that 
are already upon us in this regard; and, if it shall be the fortunate and 
eminent lot of your distinguished committee to be the first body of 
legislators iu the world to take up the task of formulating the facts 
which the logic of events have given you, and, in the light of a philoso- 
phy of history which will give us progress with order, you styall declare 
the duties of the industrials to all and of all to each industrial in politi- 
cal relations, you will have had ample justification for your labors and 
your outlays. 

An industrial civilization demands the recognition by law of the fact 
that the industrials are not a class, and that they constitute the great 
body of society and of the State, and that the professional, legislative, 
administrative, and judicial classes are special functionaries, classes, and 
servants of the great body politic and industrial. Ca3sar was the 
State — the people are the State. 

Hence, any law, policy, or public act which has not for its primary and 
principal object the welfare of the mass, is class legislation or action, par- 
tial, unjust and indefensible. For this reason the efforts of trades-unions, 
co-operative societies, isolated communities or colonies, have failed and 
must coutinue to fail to bring general relief; and only through general 
relief can any class be relieved from an impending anarchy, since modern 
life is intimately and essentially complex and co-extensive with the in- 
terests of society and the State as a whole. 

The right to "life, liberty, and the pursuit of happiness" is conceded, 
but it is not yet established. The right to the means of life, to the se- 
curity of liberty, and to the opportunity to pursue happiness must be 
secured. 

These mean not agrarian divisions of past accumulations which 
frugality, forethought, and toil have supplied, but they mean that the 
people and the government are one in fact and purpose, and we must 
speedily denounce and remove the traditional error that government is 
a metaphysical entity above and apart from the people, to which the 
latter owe only taxes and obedience. This error breeds in discontented 
and revolutionary minds its counterpart, which causes the proletariat 
to regard the government as something other than their highest ex- 
pression of order and progess, of liberty, justice. and beneficent power. 

Modern politics demands that land, transportation/ labor, and that 
great instrument of human association, money, should be public func- 
tions and trusts. Confiscation under any pretext is not required. Com- 
pensation and justice can effect all needful changes through gradual 
and persistent methods. 

When government acquires or holds lands it does so in trust for all 
its citizens who may wish to use it under equitable regulations, and has 
neither excuse nor right to delegate its titles to classes, individuals, or 
corporations. 

When government, State or Federal, grants charters or makes laws 
regulating transportation of men and materials, it acts for all, and, as in 
the case of the post-office, should specially favor no class or individual. 

When government assumes to regulate general labor, which it should 
only do in an advisory manner through a bureau of government statis- 



404 DEPRESSION IN LABOR AND BUSINESS. 

tics, it cannot be permitted to discriminate in its policy either in favor 
of or against the industrials or the capitalist class. 

When government takes away from the private citizen the right to 
issue, coin, or circulate as lawful money his own products or his own 
credit, it does so for the good of all ; and, in the exercise of this sovereign 
power of government, no power rightfully exists in Congress or else- 
where to alienate or delegate this function to any class of men or cor- 
porations. 

Banks of discount, deposit, and exchange are a normal and necessary 
part of our social and industrial life 5 but banks of issue, circulating as 
money thek credit, are usurpers of a function of government, and 
should be suppressed or treated as counterfeiters. Money being one of 
the most essential instruments of industrial association, and being 
always and everywhere the creation of law — being equally "fiat money,^ 
whether made of a substance of iutrinsic value or intrinsically valueless 
— must be provided in such sums as individuals can give security or 
value to the government for, according to their requirements. 

The financial dry-rot that has crippled our industries, and that has 
made the world a vast pawnshop, results largely from usury or interest. 
This is forced upon the people by debt. Debt comes in most cases from 
lack of sufficient actual money to transact business. The modern plu- 
tocracy are adverse to a cash system of business, adverse to the pay- 
ment of interest-bearing devices. 

Government, possessing the sovereign attribute of making money r 
never should borrow money nor pay interest. It should buy what it 
requires and pay for it. Government alone should receive interest. The 
Wright land and loan bill embodies the true principle, and foreshadows 
a great and most valuable change in this regard. 

To properly effect the change into our permanent industrial form of 
civilization, a few essential things may be indicated. 

1st. The moralization of wealth — both capital as accumulated labor, 
and labor as the potentiality of wealth. 

To accomplish this, legislation is powerless. This is evidently a func- 
tion of the spiritual power of society as embodied in public opinion, and 
its exponents, the press, art, the pulpit, and the drama; legislators must 
keep hands off except as mere agitators in this field. 

2d. The industrialization of armies. 

Here legislation is urgently and immediately demanded. We have 
demonstrated our ability to get along as a people without large armies 
or navies. We have millions of unemployed who should be enlisted, or- 
ganized, equipped, and set to work in wars of conquest upon nature— in 
wars of beneficence and construction, that are needed to develop and 
reclaim our country and our planet from the imperfections which still 
clog the way of human advancement, prosperity, and happiness. 

Vast public works by States and by Federal authority should be un- 
dertaken at a hundred points within our jurisdiction. The proceeds of 
these labors would defray all their expense. They need not interfere 
with private enterprise or industry, and their certain success would 
make us in fact rather than in name a commonwealth. 

3d. The revocation, upon equitable terms, of corporate charters which 
confer upon classes or corporations functions like those of transporta- 
tion, telegraphing, &c, which could be more efficiently and equitably 
performed by States and the Federal Government, aud the gradual ac- 
quisition by the government, of railways, steamship lines, telegraphs, 
telephones, and express company properties and functions. 

4th. The entire and absolute secularization of the State and of all 



DEPRESSION IN LABOR AND BUSINESS. 165 

laws, ill order that the spiritual power may be free, and that bigotry 
and superstition shall not, under guise of law, binder the State in its 
normal duties, nor harass the citizen in his allegiance and duty. 

5th. The free elementary education of the masses, and preparation of 
men to support women and children. 

Gth. Local self-government. No Federal interference by sumptuary 
or other laws of a purely moral or religious bearing 5 nor by legislation 
beyond the delegated powers of the Constitution. 

7th. Simplification of remedial justice in courts of law, and reduction 
of its expense. 

These, with numerous analogous measures not necessary to refer to 
at this time, seem to me to be the only practical methods whereby we 
can arrive at a peaceful and orderly solution of the great question of 
our time, viz, that of a proper adjustment of the elements of modern 
society to an industrial form of civilization. 

California has taken the lead in this reform, and her example, al- 
though not a perfect model, is valuable to our national legislators. 

I am, Mr. Chairman, and gentlemen of the committee, 
Sincerely vours, &c, 

JOHN G. MILLS, 
932 Arch Street, Philadelphia, Pa. 

January 1, 1880. 

H. Mis. 5 30 



LABOR COMMITTEE INDEX. 



CEICAGO TESTIMONY. 

CONTRACTION OF THE CURRENCY— SOCIAL AND LABOR PROBLEMS. 

Page. 

Views of Mr. L. J. Gage, cashier of the First National Bank. 5 

Mr. George Schneider, president of the National Bank of Illinois. .. 14 

Mr. George Marshall Sloan, lawyer and farmer 21 

Mr. Charles Randolph, secretary of the Board of Trade 34 

Mr. Joseph Eastman, contractor aud builder 42 

Mr. Jonathan Y. Scammon, lawyer and ex-banker 50- 

Mr. Joseph K. C. Forrest, writer for the press 72 

Mr. William Halley, printer and publisher 75 

Mr. John H. Kedzie, real estate owner 84 

Mr. Van H. Higgins, lawyer and real estate operator 90 

Mr. D. K. Streeter, of the Council of Trade and Labor 101 

Labor statistics <. 101 

Plan of the Council of Trade and Labor 114 

Views of Mr. P. H. McLogau. printer 114 

Mr. C. McAuliffe, printer „ 118 

Mr. C. F. Kenyon, shoemaker 120 

Mr. George Rogers, iron-moulder 122 

Dr. James Taylor, doctor of philosophy 125- 

Mr. D. R. S perry, farmer ' 136 

Mr. T. J. Morgan, machinist and glass finisher 139 

Mr. George A. Schilling, cooper 15:} " 

Platform of the Socialistic Labor Party 153' 

Views of Mr. Benjamin Sibley, photographer 156 

Mr. John McAuliff, stationary engineer 160 

Mr. James McArthur, iron and coal business 163 

Mr. Frank G. Thompson, workingman 176 

Mr. John M. Clark, leather manufacturer 177 

Mr. T. W. Baxter, manager of the E*lgin Watch Company 183 

Mr. A. R. Parsons, printer 192- 

Resolutions of the Eight-hour League 196 

Views of Dr. W. J. W. W. Washington, physician 200 

Mr. Carl Beer, fancy goods importer 201 

Mrs. Sarah M. Mills, delegate from the Liberal Reunion 206 

Mr. Lyman E. DeWolf, lawyer 209 

Mr. Harvey B. Hurd, lawyer 212 

Mr. F. F. Munson, land business 215 

Mr. Michael Haley, quarry and farming business 217 

Mr. William Stewart, grain and lumber and grocery business o 219 

Mr. O. W. Potter, Chicago Rolling Mill ." 230 

Mr. Jesse Spalding, lumber business 236 

SAN FRANCISCO TESTIMONY. 

LAND MONOPOLY AND CHINESE IMMIGRATION. 

Views of Mr. T. B. Shannon, collector of the port of San Francisco.... 238 

Statistics of trade with China 252 

Views of Mr. Loring Pickering, publisher of the Evening Bulletin 253 

Mr. John F. Schaefer, clothing manufacturer 263 

Mr. Dr. C. C. O'Donnell, physician 267 

Mr. Joseph C. Gorman, tinner 275 

Mr. Thomas Terry, leather business 280 



468 INDEX. 

Page. 

Views of Mr. J. V. Webster, farmer and horticulturist 284 

Mr. James F. Stuart, lawyer 294 

Mr. B. C. Duffy, cigar manufacturer „ 299 

Mr. William Wright, street peddler 301 

v Mr. James O'Sullivan, printer 303 

Mr. Samuel Braunhart, boot and shoe trade 306 

Mr. Stephen Mayhill, house lather -. , 310 

Mr. S. A. Kusel, shirt manufacturer „ . 31 1 

Mr. E. W. Slessinger, boot and shoe business „ 314 

Mr. Alexander Dunbar, author and contractor .'. 316 

Mr. Samuel Lewis, cigar manufacturer .... 318 

Mr. Patrick J. Healy, newspaper carrier and law student . - .. 320 

Mr. T.B. O'Brien, miner 324 

Mrs. Ralph, milliner. 327 

Mrs. E. Swift, real estate business and mining stocks 328 

Mr. John A. Collins, attorney at law 328 

Mr. John Richard Freud, merchant 336 

Rev. Otis Gibson, missionary to the Chinese 338, 358 

Mr. M. J. Donovan, ex-State senator 350 

Mr. William R Schaefer, furniture manufacturer 359 

Mr. William M. Haynie, farmer 360 

Mr. James Gilroy, former resident of China 362 

DES MOINKS TESTIMONY. 

CONTRACTION OF THE CURRENCY. 

Statement of Mr. Stephen Ford 365 

Mr. George M. Walker, State treasurer 365 

Mr. Owen Brownley, laborer and coal miner 371 

NEW YORK TESTIMONY. 

CONTRACTION OP THE CURRENCY. 

Views of Mr. Peter Cooper, retired manufacturer 372 

Mr. George W. Dean, real estate business 385 

BOSTON TESTIMONY. 

CONTRACTION OF THE CURRENCY — PRISON LABOR. 

Views of Mr. H. H. Bryant, clothing business.. 390 

Mr. David J, King, straw goods business 397 

Mr. Horace Binney Sargent, real estate owner 403 

Mr. John S. Butler, lawyer and oil business 414 

Mr. John M. De^e^ photographer 418 

Mr. Charles H. Citchman, shoe business and member of the legisla- 
ture - 422 

Mr. George B. Perry, compositor and proof-reader 433 

COMMUNICATIONS. 

From Mr. N. C. Thompson, of Rockford, 111 .. 205 

Mr. R. P. Blanchard, of Chicago, 111. 437 

Mr. C.S.Engle,of Chicago, 111 437 

Mr. H. T. Holbrook, of San Francisco, Cal 440 

Mr. Giles Cowles, of Fremont County, Iowa 443 

Mr. Samuel C. Hunt, of Boston, Mass 444 

Mr. George Rhey, Millwood, Westmoreland County, Pa 447 

Mr. John G. Mills, Philadelphia 462 
















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